How to Consolidate Debt with Bad Credit

You have bad credit. You feel hopeless because you are covered in debt. How will you pay off your loans when no one wants to loan you the money to consolidate your bills into one consolidation loan? Where will you find the loan you need to consolidate debt when no one is interested in talking to you about it?

You do have options. People with bad credit can find a lender who will talk to them about consolidating their loans into one easy payment. However, you have to be prepared to pay a higher interest rate. Later, after you have a good payment history, you can refinance for a lower interest rate and better terms.

The first thing you need to do is call around in your local area and find someone who will talk to you about your options. Talk to your bank first and then contact the smaller loan companies. Many of these companies are locally owned. Call them and ask them what they offer to their customers. Talk about interest rates and terms.

Find out what the loan officer will need from you. Most of the time, they will need a paycheck stub, they’ll need a utility bill in your name, they’ll want seven or more references and possibly income tax returns if you haven’t been on your job for a year or longer.

A word of caution, do not put down anyone’s name on your list of references that will not give you a good reference because the loan companies can and will call them after you list them. They’ll call them if they can’t reach you and they’ll call them frequently until they do so reach you so this is also something to consider. However, if you have the means and the intentions of paying your loan on time, you won’t have to worry about it.

Consolidating your debt with bad credit mandates you use loan companies in most cases. Occasionally, you’ll find a bank willing to walk out on a limb with you but for the most part, the only consolidation loan for bad credit is found in a loan company. With larger parameters and lenient guidelines, they can usually find a loan for you. However, be forewarned, often it is like taking out a loan with a loan shark and if you don’t pay when you say you’ll pay, the consequences are harassing phone calls and letters for you and your list of references.