Do You Want to Improve Your Poor Credit Score?
Do you have numerous unpaid debts? Do you dream of being debt free? Is your poor credit score hindering to avail loans? Do you want to improve it? Then apply for a bad credit debt consolidation loan - a rewarding chance for bad credit borrowers to recover their credit score.
You may think - again a loan load. But let me assure you that these loans will lessen your all loan loads. There is a proverb in English that only iron can cut an iron. Same thing is applicable here. You will take a loan to eliminate your loan lumbers. This process is very simple. You will have to take a separate loan that will cover your all present loans and later you will have to pay only for that single loan. Therefore the interest rate, you are now paying for different loans will be reduced. Thus, you can repay the amount with low monthly installment which will be convenient for you. It will help you to maintain a regular payment. And by maintaining regularity, you can erase your bad credit history.
You will get an option to avail these loans either in secured or in unsecured form. Obviously for availing secured loans, you will have to pledge something as security against the loan amount. On the other hand, unsecured loans are offered without collateral. As a secured loan, you can borrow any thing from $5,000 to $75,000 where repayment period will vary from 5-25 year. Whereas, with unsecured loan you can borrow the amount ranged from $5,000 to $25,000 and the repayment period will vary from 5-10 year.
However, you will have to aware of your credit score before applying for a bad credit debt consolidation loan. Mainly, your credit score is the estimation of your present fiscal credit value. Credit score or FICO is normally ranged from 300-850. And this range determines whether a credit score is good or bad. If your credit score is 580 or below, then it will be considered as a poor credit score. There are various reasons for it, like CCJ’s, Defaults, Bankruptcy, Arrears etc. So, at first you will have to check what your credit score is. You may take help of various credit rating agencies and get a copy of your credit report from there.
Consolidating all sorts of loans can be beneficial? This question may strike in your mind. It’s true that consolidating all sorts of loan may not be profitable for you. If your credit is $5000 or above, then you can take help of these loans. Furthermore, consolidating the loans that have low rate of interest, like student loans, may not be much profitable for you.
At last, you are advised that with these loans you can fall into loan trap once again. So be sure about your repayment capacity at first and then apply for these loans. A thoughtful decision will enable you to be bedecked with these loans.
Unsecured or Secured Debt Consolidation Loans
Getting out of debt is easier said than done. Fortunately, there are many options available to people hoping to eliminate or reduce high consumer debts. Before filing for bankruptcy, which is more damaging than having excessive debt, consider other alternatives. For example, acquiring a secured or unsecured debt consolidation loan is one method to becoming debt free.
Ways to Eliminate Unnecessary Debts
There are many ways to reduce debts. Some people prefer to eliminate debt without obtaining a loan. In this case, getting second employment or seeking a higher paying job may provide you with the extra cash to pay down balances. There is no easy way to reduce debts. Furthermore, eliminating debts take time. Because of high finance fees, paying double the monthly minimum may not result in a significant reduction. However, debt consolidation loans have lower rates, which mean lower finance fees.
It’s important that you budget the expenses corresponding with your income or revenue. If you spend more than you earn, then you need to take debts to cover up your expenses. F you earn more than you spend, then you have savings. It’s very difficult to increase revenue or income, therefore to reduce debts you must reduce your expenditure also. Budget for the necessary and the emergency expenditure that you may have. Prioritize the list of expenditure. If something can be delayed till the next month, then do so. in this way, you wouldn’t need to take short-term loans such as payday loans to cover the shortfall.
It’s difficult to increase the revenue streams but it can be done. This can mean that you take up a night job in addition to the day job or switch over to another job that pays well. Or somebody in the family may have to take up an additional job. In this way you can quickly repay your debts and thus reduce the loans.
Pay back overdue debts immediately. Don’t be laid back on paying back the debts such as mortgage loan charges, car loans charges etc., as they might take away the financial asset and you might also lose the collateral. Therefore you lose on both counts.
Debt settlement agencies help to reduce the debt amount. They can reduce the loan amounts, the interest charges as well as debt / loan tenures. Thereby there is a less outgo of your financial assets. They can reduce the debt amount to 75%, however this is dependent on an individual case basis.
What are Unsecured Debt Consolidation Loans?
Unsecured debt consolidation loans are granted by banks and other financial institutions. These loans are not secured by property. Hence, they are also termed no-collateral loans. Getting approved for these types of debt consolidation loans are not easy. If you have too much debt, the majority of lenders are hesitant to extend you additional credit. On the other hand, if you have a very high credit score and earn a sizeable salary, obtaining an unsecured debt consolidation loan is feasible. Overall, individuals with a superb credit rating know how to use credit responsibly. Besides, these individuals will not risk injuring their credit rating.
The disadvantage of unsecured debt consolidation loans is the higher rates. Because, lenders are taking a gamble, be prepared to pay a high interest rate. Still, lender rates are low in comparison to typical credit card rates
What is a Secured Debt Consolidation Loan?
A secured debt consolidation involves collateral. To get approved for these types of loans, the lender will request a valuable piece of property. A vehicle title or boat title may serve as sufficient collateral. If you own a home, consider obtaining a home equity loan or line of credit for the purpose of consolidating debts. These loans do not require a high credit rating. However, applicants with good credit will receive prime rates. Avoid defaulting on secured loans. Failure to pay will result in the lender taking full possession of your property.