How Debt Consolidation Loans With Bad Credit Can Solve Credit Card Debt

Credit card debt is one of the biggest contributors to financial woes. However, the problem can be dealt with effectively through debt consolidation loans, with bad credit scores of little concern. The prevalence of credit cards in society means that it is almost impossible to get by without one. From buying low-cost flights to getting the biggest bargain on ecommerce websites, the credit card is basically an essential tool of modern living.

But conversely, it is also one of the principal contributors to personal debt, prompting many to search for debt consolidation loans with bad credit. For millions of Americans, the pressures created by credit card usage can be extremely high. Consolidation is seen as the most proactive way to set about dealing with the debt, and getting back on financial track. But securing consolidation loan approval despite having bad credit scores does depend on satisfying certain conditions.

The big question, however, is whether or not taking out a debt consolidation loan can really make any difference to the pressure created by credit card debt. Thankfully, the answer is that it can. Unfortunately, it does not take long for the minimum repayments due on a credit card bill to become too much to handle.

With the interest rates as high as 21%, just 2 or 3 missed payments can almost triple the size of the minimum payment. But even when seeking debt consolidation loans with bad credit, the benefits are clear. Consolidation involves combining all of the credit card balances into one sum, then taking out a single loan to repay the amount in one go.

It means that, not only is only one debt to be repaid, but that only one interest rate is charged, thereby reducing the overall cost of the debt and making repayments much more affordable. Securing consolidation loan approval with bad credit requires some effort, but the effort is certainly worth it. After all, with credit card balances paid off, credit scores are increased.

This then means any future loan and credit card application is more likely to be approved with good terms. But how can a debt consolidation loan be secured with bad credit, Many people think that applying for a debt consolidation loan with bad credit is doomed to failure. 10,000 – and the chances of success seem to be minimal. But the fact is that low credit scores are actually not very important at all. Lenders are much more interested in other issues, such as affordability.

They know that a credit score is only a reflection of past actions, but reveals nothing regarding a current ability to repay. Therefore, regardless of a credit rating, securing consolidation loan approval is always possible. In terms of proving affordability, issues like employment status and income are important, as is the state of the debt-to-income ratio that the applicant might have.

Of course, since a debt consolidation loan is designed to clear debt, lenders are more open to approving those applications. The task of finding the right lender is a little complicated when attempting to secure a debt consolidation loan with bad credit. While the low credit score does not prevent approval, the terms of the loan might not be so good.

So, finding a lender that offers good terms is important. Online lenders tend to offer the best deals usually, and because they specialize in bad credit lending, securing consolidation loan approval is not difficult with them anyway. Their terms usually mean a lower interest rate and, most importantly, a longer repayment term. That way the monthly repayments are kept low, ensuring the debt consolidation loan is the most affordable possible.

Because you pay interest when you don’t clear your card each month, debts can mount up and take a long time to pay off. Interest charges and the way they are calculated vary considerably. Make sure you understand what happens on your card. If you don’t pay your bill on time, there could be some serious consequences.

Fees and charges. You’ll be charged a late payment fee which could be as much as £12, plus interest on the whole amount you owe. Increased interest rates. If you’re a repeat offender your card provider might increase your rate, reduce your credit limit or cancel your card. Problems getting other credit.

Paying late can damage your credit rating, making it harder to get other credit, mortgages, other cards and even phone contracts. Pay by Direct Debit. The best way to avoid the late payment trap is have the money go out of your bank account automatically. Ideally, set up a Direct Debit to pay off the full amount every month.

Pay with time to spare. Although you can pay your credit card bill by phone or online from your bank the same day, it can take a few days to process your payment. So don’t leave it to the last minute. The minimum amount you need to repay on your card each month is often quite small, but paying just this amount will cost you a lot in the long run. You could be making repayments for years and end up paying more in interest than the original debt.

The minimum repayment for this card is 2% of the balance, or £5 - whichever is greater. The first payment will be £20, but this figure will fall as you repay the balance. The table shows how much you could save if you repay the same amount every month on a £1,000 balance.



Remember, if you don’t pay off the whole bill you’re likely to be charged interest on everything on the card, including new things you bought that month. So if you keep spending on that card you’ll end up paying even more. Don’t go over your limit. If you do you’ll be charged a fee - normally up to £12.