Consolidating debt loans with bad credit
But if you already have a poor credit score, is debt consolidation really a possibility for you? Before we continue, let’s make sure we’re all on the same page.
Your history as a borrower is collected into documents called credit reports by the three major credit bureaus: Experian, Trans Union, and Equifax.
Speaking of applying for a loan, just what is a debt consolidation loan?
Basically, it’s a loan you take out for the express purpose of paying off the debts you want to consolidate.
You take out the new loan, and then use those funds to pay your old debts off.
There are certain loans that are advertised specifically as debt consolidation loans, and you include the other balances that you want to pay off as a part of the loan process.
Potential lenders use these scores to help determine whether they’ll lend to you and at what rates. The most important category, worth 35 percent of your total score, is your payment history.This is a measure of whether you’ve been paying your bills and paying them on time.When it comes to whether you’re likely to pay off your debts in the future, it’s not surprising that lenders will want to know whether you’ve paid your debts in the past.Bad credit is like the worst kind of slope: a slippery one.Once you miss some payments, your credit score will start dropping and the fees and interest on that debt will keep growing.