When it comes to credit and debt, often we find ourselves sinking deeper and deeper with seemingly no way out. When our debts exceed our income it is time to look into ways to reduce our debt and preserve what credit we have left. This can often be done with debt consolidation for people with bad credit. This may consist of a debt consolidation loan or straight debt consolidation where a company negotiates with your creditors to lower your interest and payments so you are able to pay them off.
A debt consolidation loan is just that, a loan where you are given one lump sum to pay off all your debts and you in turn pay the company a monthly payment until you pay back the loan. This can help your credit rating as your creditors will be unaware that you are having trouble paying back your debts and will give you a positive rating when you pay them off through a debt consolidation loan.
If you opt to use straight debt consolidation where a debt consolidation company negotiates with your creditors to reduce your interest and lower your monthly payment, this will be viewed in a negative light by your creditors and they may place a note in your credit report that you used debt consolidation services and did not pay back the full amount that was due. Using this option may make it difficult for you to obtain any type of future financing.
If you are having trouble paying your debts and your credit rating is less than perfect you may want to consult with a debt consolidation professional that has been in business a number of years and has experience in credit and debt issues. They may be able to help you get back on track financially and also help you to rebuild your credit rating. As long as you take care of your credit, you should only have to use debt consolidation loans for bad credit once.