Introduction
Basically bad credit consolidation is the transfer of high interest credit accounts to one single account which often has a lower interest. For instance you may decide to roll three credit card accounts into one for easier payment. The loan applied on the bad credit consolidation loan is fixed. If you are deeply plunged into debt you should consider consolidation services since you are already treading on a dangerous road and the dead broke junction is not very far.
Step 1
Bad credit consolidation sounds a sound idea; however, do not jump into this band wagon blindly. There are various factors you ought to consider. Above all, analyze if this is what is best for you. The following tips will come in handy and provide insight on bad credit consolidation.
Step 2
Loan specifications
Your bad credit consolidation application should be justified if you are getting better rates and terms, otherwise it defeats the whole purpose. The interest rate offered should be lower than what you were paying before. You should also work out a flexible repayment period with your provider. Consolidation should buy you time to sort out your financial situation. The major incentive offered by loan consolidation companies is that you get to choose the period you want to cover your debts. You can even stretch it to 20 years. However, you should do proper calculations and find out how much you will pay in total. Taking too long to repay your loan will mean that you pay more. The shorter the period the better is for you.
Step 3
Credit history
The loan consolidation rate will depend on your credit scores, generally, poor scores attract higher interests. The good news is that you can repair your scores with time. The fastest way to do this is by ensuring that you make timely payments. If you do this continually for a period of 6 months you can negotiate for better rates on your bad credit consolidation loan.
Step 4
Collateral
In case you have very large debts, the loan provider may need some form of collateral; these can be a car, a house or any other property. Some lenders will approve your bad credit consolidation loan if you have a consigner who has an above average credit score, basically a score of above 700 points should suffice.
Step 5
Be on the lookout for scams
Bad credit consolidation scams are on the rise. Basically such people exploit your situation since they know that you may be desperate. Go for reputable providers who have been in this business for a reasonable period of time. Do not trust everything you read on the adverts. Consult various providers and compare their rates. You can also your friends and colleagues who have used such providers. They should give you credible information which will help you make an informed decision.
Tips
Once you find a reliable bad credit consolidation provider ensure that he will send reports to credit agencies. This will ensure that you build your credit ratings as you repay your loans, which makes you credit worthy.
Sources and Citations
http://search.fdic.gov/
