If you are struggling with unsecured debt, then you might have considered taking out a debt consolidation loan. But can you do this if your credit score is in pretty rough shape? In this article, Resolvly discusses whether you can get a debt consolidation loan with very bad credit.
We’ll identify some common barriers to obtaining debt consolidation loans and provide insight into whether debt consolidation is a good idea to begin with. Start your journey towards financial freedom by understanding the basics.
Score-Related Barriers to Debt Consolidation Loans
Having a low credit score is the primary barrier that can hinder your ability to get a debt consolidation loan. But how low is too low?
Debt consolidation lenders do not expect you to have perfect credit. If you did, you would not need their services to begin with. However, these lenders do not want to risk losing money by partnering with clients that are unlikely to follow through on their obligations.
As a result, most debt consolidation loans require consumers to have a credit score of 580 or more. If your score is below this mark, it may still be possible to get a debt consolidation loan. Unfortunately, the interest rate on the loan will probably be relatively unfavorable to your long-term financial goals.
Circumventing These Barriers
A very low credit score will not immediately disqualify you from obtaining a debt consolidation loan. There are several ways that you can get around having a score under 580.
The first step is to check your score. You want to have an accurate assessment of your current scores before you begin to seek out a debt consolidation loan. In addition, take time to do your research. Don’t jump at the first loan opportunity.
If you still want to pursue a debt consolidation loan after checking your credit report, you might want to find a cosigner. Having a trusted friend or relative cosign on your debt consolidation loan can help you to overcome a very low credit score. Keep in mind that many people may not be willing to take this risk, though.
Are Debt Consolidation Loans a Good Idea?
When you are struggling with debt, consolidation loans may seem like the golden ticket to financial freedom. You may have received dozens of letters in the mail with ads that contain statements like, “You are pre-approved for a $50,000 loan” or other outrageous claims.
Unfortunately, these messages are designed to bait you. They often include false promises. The loan may give you enough money to consolidate a few bills, but leave you with more monthly expenses than you had before.
With that being said, debt consolidation loans can be a viable solution if you have a manageable amount of consumer debt. For example, debt consolidation can be a solid option if you need to pay off a few high-interest credit cards and can obtain a low rate on your new loan.
Are There Other Options?
Debt consolidation loans are not for everyone. In fact, consolidating your debt is not nearly as simple as some lenders would lead you to believe.
If you are struggling with consumer debt, then you should consider speaking with a consumer law attorney. Resolvly can provide you with more information on debt resolution and can even connect you with an experienced consumer law attorney in your state.
Resolvly adds a personal touch to debt assistance and our ultimate goal is to help clients with their current debt while empowering them to not end up in the same position in the future. We are devoted to helping our clients reach true financial freedom. The company can assist with all types of unsecured debt, including credit cards, medical bills, private loans, private student loans, business debt, and vehicle repossessions.