Many people have struggled to rebuild their credit rating while being overcome by multiple debts, and they often have difficulty keeping all of their lenders happy. These people, even those who have had a string of financial problems, are opting for debt consolidation loans as a way out of bad credit.
What Debt Consolidation can do for People with Bad Credit
Here are several good reasons to seek for debt consolidation loans if you have a low credit rating:
- You will be paying one lender, not five
This makes your life a whole lot more simple. Just keep track of one due date and one amount and make sure that you have enough to meet it each month. Many people are late on debt payments simply because they lose track of given due dates and amounts. That’s understandable. Debt consolidation loans reduce the hassle and improve the likelihood of you paying on time.
- These loans are almost always at a lower interest rate than what you are currently paying
Many of the bad credit lenders who give debt consolidation loans will negotiate down your interest rates with your creditors, some of which get up around the 20% mark. Even a couple of points down in interest rates can save you hundreds of dollars every month.
- You will get out of debt faster
Many people in debt pay the minimum balance and spend up to two decades in debt. Debt consolidation will speed up the timetable so that you can be debt-free in five years or less. That will probably require some discipline on your part to meet the payments, but sometimes we need a kick in the pants to tighten our belts and get out of debt more quickly.
- You won’t get nasty phone calls
Lenders that give bad credit debt consolidation loans are accustomed to dealing with people who struggle to make monthly payments on a debt. Many of these lenders even have debt counselors on staff that will walk you through plans to a more sound financial future. Now that you are dealing with just one lender, you can wave good-bye to threatening calls from one of the five lenders or companies that you used to have to deal with, because they will no longer be permitted to contact you. That’s worth a lot of peace of mind!
Debt consolidation has proven to be a great way for people to rebuild their credit scores and gain a more sound financial footing. For the reasons listed above, and others, such loans make a lot of sense today, especially for people who need a little discipline and order to their plan for debt-free living.