Getting a debt consolidation loan is one of the most effective ways to manage debt. Combining all your debts into one monthly payment can offer you peace of mind when dealing with multiple creditors. However, this type of debt management plan still involves getting a loan. And as you know, getting a loan with bad credit isn’t always easy. If you’re in that position, here are some ways to get a debt consolidation loan despite having bad credit.
Shop Around
It’s always a good idea to shop around for any type of loan. Accepting the first loan offer you come across isn’t advisable. Rather, do your research. Check the fees and repayment terms of different lenders. The experts at Symple Lending insist it’s one of the best ways to know you’re getting a good deal.
Understandably, this process can take time. But in the end, you’ll have saved hundreds or thousands of dollars. And the good thing is that most lenders put this information on their websites. You can learn what you need to in the comfort of your home.
Know Your Credit Score
Lenders give out loans based on your credit condition. A higher credit score means a lower interest rate and vice versa. Once you know your score, finding a lender who can work with you is easier. Some lenders don’t mind giving out loans to people with bad credit. Check them and find their requirements before applying.
Check for Errors in Your Credit Report
It’s not unusual for there to be errors in your credit report. These mistakes can lower your credit score. Errors like inaccurate credit limits, wrongly reported payments, or incorrect accounts could be the reason you have a poor credit score. In case there’s an error, report to the credit reporting company and have the issue rectified.
Find a Co-Signer
Another way to help you get a loan is by adding a co-signer with a good credit score. This person agrees to take equal responsibility for the debt consolidation loan despite not having access to the funds. As Symple Lending suggests, borrowers with bad credit can benefit from using co-signers as they can qualify for better rates. Keep in mind that if you fail to repay the loan or miss payments, the co-signer’s credit score is affected.
Consider a Secured Loan
If you’re not having any luck qualifying for a standard debt consolidation loan, you may want to consider a secured debt consolidation loan. Secured loans need some type of collateral, such as your home, vehicle, or another asset. If you fail to repay the loan, the lender can seize the collateral to recover funds. Getting a secured loan is easy because the lender knows they have security. In fact, you may even get better interest rates on this type of loan than an unsecured loan.
There are many reasons to consider a debt consolidation loan, one being that it streamlines your payment process. As such, even with bad credit, it’s a good idea to see if you can get it to help you manage your debt.
