Are Debt Consolidation Loans Bad For Credit

A great way to quickly repay your creditors you can apply for consolidation even if you have a bad or poor credit history. In a sentence debt consolidation is the process of taking out one large loan to pay off multiple smaller loans. The good news is that with consolidation loans bad credit isnt always a deal clincher.

In most cases a debt consolidation loan will have a much lower interest rate depending on your creditworthiness saving you money on interest over the life of your loan.

Are debt consolidation loans bad for credit. For example lets look at our hypothetical friend pete. Some lenders are still willing to offer you a bad credit consolidation loan even if youve had financial problems in the past. The stronger your credit history the more likely a lender is to lend to you. When you apply for debt consolidation loans for bad credit most lenders will check your credit record.

Debt consolidation loans for bad credit take multiple debts and consolidate them under one affordable monthly payment. People typically use debt consolidation loans to pay off their high interest debtlike credit card debt which can have interest rates that range from 18 25. The key idea is to combine or consolidate several loans with different terms into one loan hopefully with more favorable terms. Getting a debt consolidation loan for bad credit may require shopping around but there are options including loans from credit unions and online lenders.

In fact some lenders cater to borrowers. Getting a debt consolidation loan with bad credit if youre on a low income. You can try to improve your credit score before applying to give yourself a better chance of obtaining the loan.