Poor Credit Debt Consolidation Loans

Poor Credit Debt Consolidation Loans
by Rebecca Game

Poor credit debt consolidation loans are an excellent option to consider if you are an individual who wouldn't qualify for a traditional loan, but are in need of money to pay off bills, consolidate debt into one lower payment, and improve your style of living.

Understanding the exact meaning of a poor credit debt consolidation loan is extremely important. Poor credit debt consolidation loans are meant with individuals that have low credit report scores, as rated by Experian.com, Transunion.com, and Equifax.com These three credit bureaus are where lenders turn to prior to offering a loan to a business or individual. Lenders obtain an individual's credit scores to determine if the person is worthy of the loan. Scores listed through the three credit bureaus are configured and calculated using software by the Fair Isaac Company, and are called FICO scores. The FICO scores range between 300, for no credit, and 850, for perfect credit.

Virtually no one has perfect credit scores at 850, because scores are based on a number of factors, including debt to income ratio and late payments, to name a few. However, scores of less than 619 are considered poor credit, and scores below 550 make it virtually impossible to obtain a loan except in certain instances where a lender specializes in poor credit debt consolidation loans and is looking for such borrowers. In general, though, scores below 619 are considered poor credit, and the borrower is considered a high risk to the lender.

Having poor credit is difficult, and it's not ideal by any means, but it also doesn't have to be something that lasts forever. Credit scores need not rule out the options a loan can offer. Relief can come with obtaining a poor credit debt consolidation loan. While it does take time, credit scores can definitely be repaired after obtaining a poor credit debt consolidation loan.

When conventional loans are out of the picture due to low credit scores, a poor credit debt consolidation loan can offer a way out of having poor credit, and a way of repairing credit scores and creating a better lifestyle. Poor credit debt consolidation loans can come at a time when the borrower needs money the most - when payments are high, or when income levels aren't high enough to pay all of the bills. They are available to even those that are self-employed or have been involved in a bankruptcy more than ten years ago. Additionally, a poor credit debt consolidation loan offers a "light at the end of the tunnel" for repaying debt faster, as well as consolidating all bills into one smaller monthly payment. By making these payments on time, credit scores can jump as much as 100 points or more in one year.

Pros of Poor Credit Debt Consolidation Loans:

• 1. Poor credit debt consolidation loans put money into the hands of an individual who wouldn't otherwise qualify for a loan.
• 2. These types of loans give borrowers a chance to consolidate their debts and gain control over their financial state, as well as an opportunity to invest in a home or automobile if needed.
• 3. Poor credit debt consolidation loans allow individuals to borrow money without giving a reason, and therefore, can be used for any purpose, including a college education or a business.
• 4. A poor credit debt consolidation can allow the borrower a way to improve their credit rating, provided that all payments are made on time.
• 5. There is an emotional and psychological impact involved with poor credit debt consolidation loans. It gives individuals an opportunity to turn their life around and improve it when they previously felt that it was hopeless. Poor credit debt consolidation loans can also help individuals stay out of bankruptcy.

Cons of Poor Credit Debt Consolidation Loans:

• 1. The money goes into the hands of an individual with a history of poor spending habits. If the money is used in a wasteful manner, or to "splurge" on a high ticket item, for example, the loan will only add to the current financial burden if it is not used efficiently and wisely. An additional loan used for these purposes can lead to bankruptcy and financial destruction.
• 2. If payments are consistently late after obtaining a poor credit debt consolidation loan, credit scores will drop even more.
• 3. Interest rates are much higher on poor credit debt consolidation loans than for conventional loans. However, if the loan is used wisely, it can be refinanced at a lower interest rate once credit scores increase.
• 4. Poor credit debt consolidation loans that involve collateral may mean that if the money is not used wisely, ownership of the collateral may be at stake. The lender has the right to take the collateral if payments are not made on time or not made at all.

After obtaining a poor credit debt consolidation loan, and the debts have been paid, get your finances in order. Balance your checkbook to the penny, and don't make any unnecessary purchases. Don't make extravagant purchases, either. Remember, the reason for obtaining the poor credit debt consolidation loan was to get back on track. Don't employ poor spending habits that can make credit scores end up even lower. Stay away from high interest credit cards, credit cards that can't be paid off monthly, and especially, payday loans. If a large purchase is needed, such as furniture or a vehicle, look into used items. Furniture can be purchased at thrift shops and through newspaper classified ads. Join your local Freecycle group (freecycle.com) to obtain items for free that you might otherwise consider purchasing. Shop for vehicles through private owners, not at car dealerships. Privately owned vehicles will offer a lower cost to you without any added costs. Have a trusted mechanic check the vehicle over before you pay for it, though.

Rebecca Game is the founder of Digital Women ®, an online community for women in business. A 30 year entrepreneur and dedicated to helping other women find small business loans. Visit her site: Loans for Women www.digital-women.com
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Is Debt Consolidation For You?

Is Debt Consolidation For You?
by Talbert Williams

Want to pay all your bills with one check? Debt consolidation may be the
answer. It's not a loan or bankruptcy but a program, run primarily by
nonprofit organizations, that helps reduce interest rates, eliminate
late-payment fees and lower payments.

With consolidation plans, organizations such as Consumer Credit Counseling
Services and Myvesta.org arrange for you to pay off your debts within three
to five years, although it may vary depending on your needs. That's a pretty
attractive idea, considering it takes the average person 10 to 20 years to
make credit balances disappear. However, participating in a consolidation
program could affect your ability to get new credit or a loan because some
creditors will put a red flag to lenders on your credit report. Here's how
the plan works:

• 1. After giving a program counselor the account names, numbers and balances
  that you want to combine, she will help you work out a budget and determine
  how much you can afford to pay toward your debts.
• 2. The consolidator will then contact your creditors and work out payment
  arrangements. (Most consolidators charge up to 15 percent of your monthly
  payment to cover program costs.)
• 3. You make a monthly payment directly to the consolidator, who will pay the
  creditors on your behalf.
• 4. The accounts placed in the program are frozen until they are paid in
  full. To learn more about debt consolidation, go to
  http://www.1debtfreedom.com .

Talbert Williams offers debt consolidation referrals and advice. For more
information, articles, news, tools and valuable resources on debt solutions,
visit this site: http://www.1debtfreedom.com. partnership@1debtfreedom.com

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