How Do I Get a Loan for Debt Consolidation with Bad Credit?

I’ve got bad credit. Can I get an unsecured debt consolidation loan?

Generally, debt consolidation is the process of adding together the amount of unsecured debt that you have (credit cards, medical expenses, other unsecured loans for example), getting a loan for that amount, paying off all the debts that were included in the calculation of the loan amount and then having only the loan payment to make.

There are benefits to using this process. It reduces the number of payments that you have to make each month. The collection calls for the accounts you have paid off stop. The finance and late charges, along with compounding interest stop adding up. This means a considerable long-term savings.

You do not have to own a residence to secure this loan.

Can you get an unsecured debt consolidation loan if you have a low credit score?

Most debt consolidation loans are secured with a lien against an asset like a residence. Unsecured loans may be a little harder to find when you have a low credit score, since they are actually unsecured personal loans. Some lenders automatically exclude applications with credit scores below a specific number.

Don’t be discouraged. First get a copy of your credit report. You’ll be able to upfront with a lender at the start of the application process. There are several companies with an Internet presence who will “shop” your application for a loan with several different banks and lenders.

If you do decide to seek out an unsecured loan on the Internet, though, read and understand the terms of any loan offered you. Deal with a reputable firm. While a loan offer may be appealing and eliminate financial pain on your part, there may be hidden hooks or gimmicks. Ask questions if there’s something you don’t understand. Do not deal with a company that wants advance fees or payments in order to even take your application.

Finding a debt consolidation loan may take some time and research on your part, but it can be a step towards building your financial security.