Debt Consolidation for People With Bad Credit

Debt consolidation is getting more popular as more people are struggling with finances. If you want to get onboard, but you have bad credit, there may be some help available. Finance companies are under pressure to find new ways to get customers. Early in 2011, at least two of them, Wells Fargo and Citibank, announced they would offer bad-credit debt consolidation loans. This is good news for people with less than perfect credit.

Many people with bad credit are already struggling to make their monthly loan payments. The opportunity to consolidate their loans provides a way they can still pay them, but at a lower monthly payment. This can help them avoid further credit blemishes, and even start building a good credit history. Additionally, those with blemishes who are on the road to recovery, and who have made timely payments for a while, will have the ability to consolidate high interest loans into one with more affordable rates.

This is not to say that debt consolidation loans for people with poor credit will have low interest rates. If a person’s credit is on the mend, however, he may qualify for a lower rate than he’s currently paying. These loans go for varying amounts.

Whether you have bad or good credit, debt consolidation is usually a good option. You do not have to be a mathematician to figure out lower interest rates and lower monthly payments are beneficial. However, you should always use caution. You do not want to fall into the trap of consolidating your credit cards only to run them back up to their limits. That is a recipe for financial disaster. Look at a debt consolidation loan as an opportunity for a fresh start, and try to break bad spending habits