The Truth About Debt Consolidation Loans and Bad Credit

Debt consolidation loans bad credit is the cry heard more and more in today’s financial news? Have you become one of those borrowers who have found it extremely difficult to consolidate your outstanding debt because of bad credit? If you are the information contained here will give you a light at the end of the tunnel.

You like so many others in today’s world of instant gratification many have fallen into the biggest nightmare of all. Your credit was so good, 5 or more credit card companies’ extened more than $50, 000 in credit lines to you. Before you knew it you had maxed the cards out and borrowed on the equity of your home to try and pay them off.

When that didn’t work you fell behind on all your bills including your house note. Within six months you had gone from a credit score of 725 to a low of 595. Which means you will now have difficulty getting any type of loan because of bad credit.

However, this doesn’t mean all hope is lost. It means you are going to have work a little harder to find companies that will help you reorganize your debt. This is the only way you will be able to get debt relief and start rebuilding your credit.

There are financial organizations which specialize in debt consolidation loans bad credit applications. However, there are some drawbacks to working with these companies. Because of your bad credit history you are considered to be in a high risk category for payback of the loan or loans.

Many of these companies will take the risk of loaning you the money, but you are going to pay out the nose for the interest. On top of the interest you may have an upfront application fee, plus other fees buried in the fine print of the loan. The end result being you will end up paying back more money, to these lenders, than what you would have paying back your debts originally.

You need to understand not all of these companies are out to rip you off. Many of them are perfectly legitimate financial institutions which work with folks like you; with a history of bad credit.

When working with a good company, you may have to agree to pay a higher rate, but one that is much lower than the rates being charged by the credit card companies. In addition some these better companies will require you to undergo financial counseling. The purpose of this being to get you the necessary tools you need to keep from getting into trouble again with your credit.

These good companies want you to succeed in your plan to reorganize your debt. They will do everything they can to help you get your finances squared away. As you continue to work with them over a period of time you will see your credit score start to come back up.

You can recover from the strangle hold that bad credit and mind numbing debt have on you. It means you will have to work hander to find a debt consolidation loans bad credit company to work with you. However, if it puts you on the road to debt recovery and a positive credit history it will be worth all the extra work and cost.