Debt Consolidation for People with Bad Credit
Overwhelmed by credit card debt? If so, a debt consolidation loan may be answer. A debt consolidation loan does “not” hurt your credit score. In fact, it can actually help your overall credit score.
Debt Consolidation for People with Bad Credit

A debt consolidation loan affords you the opportunity to restructure your debt. Thus, saving thousands of dollars while you are gaining control of your debt. A nice feature is you only have to make “one” payment a month.

What is Debt Consolidation?
Debt consolidation is the process by which your current debt is negotiated with all of your creditors to obtain the lowest monthly financial obligation needed to satisfy all of your current accounts.

With a debt consolidation loan, you simply make one “lump sum” monthly payment. This payment is then forwarded to all of your creditors (often at a greatly reduced rate, sometimes as high as 50%).

One of the most important benefits of a debt consolidation loan is that it can afford a fresh start to a more healthy financial future. You can eliminate stress while taking back control of your life.

Debt Consolidation vs. Debt Settlement
Debt settlement programs negotiate a payment amount with your creditors that will satisfy your creditors at the best rate possible for you. Debt settlement services can quickly eliminate your debt and financial stress.

These programs can eliminate your debt in as little as 12, 24, or 36 months. Harassing phone calls from creditors will disappear, as well as the high interest rates you previously paid. Not only are late charges and over limit fees eliminated, your monthly payment will drastically drop.

However, keep in mind with a debt settlement program all information, including settlements and accounts paid in full, are reported to the credit bureaus by your creditors upon settlement.

Get Out of Debt
Over 70% of the American population is in serious financial debt. There are debt consolidation companies who can help consolidate your payments and work with your credit card companies to get your interest rates down.

Like with any decision that can have a major impact on your financial future, do your homework. Many people have lost money and ended up having to file bankruptcy because a debt consolidation company was not legitimate. Make sure you know what you are getting into and understand your contract completely.

How to Choose a Debt Consolidation Company
You should research different companies in order to find the most reputable one.

The first thing you should do is check with the Better Business Bureau that the company doesn’t have any complaints on record. Ask family, friends and colleagues to see if they have used similar companies or if they know of a good one.

Be aware of the following:

If you are having them pay your payments for you it will show up on your credit report.

These programs usually lower your credit score.

Being in debt does not necessarily mean all is lost or that you will have to file bankruptcy. The options listed above are just a few that can help eliminate your financial stress. The main thing is to not give up. Thousands of people have been in debt and gotten out of it.

Carlos Ugalde is the founder of http://www.informedcreditsolutions.com and dedicated to giving access to all people with less than perfect and troubled credit through a variety of reputable, honest lenders that in conjunction with ICS will allow clients to understand and improve their credit situation through a variety of services free, no obligation services and online educational material.

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I am often asked the question; What does bad credit cost me?”

It is a hard question to answer because of the individual’s circumstances and the fact that lenders are competing fiercely for customers.

But I will give it my best shot.

Mortgages

If you know your credit score you will be in a position to make a pretty good guess at what interest you will be charged on a mortgage. In today’s (March 2006) market, mortgage rates for those in the top or prime category, with a score above 720, will pay around 6.25%.

As your score declines your rates will increase.

For those in the second tier, with a score between 700 and 720, rates will go up to around 6.38%; for those in the third tier, with a score between 675 and 699, rates will be about 6.91%; for those in the fourth tier, with a score of 620-674, rates will be about 8%; in the fifth tier, with scores in the area of 560 to 619, the rates increase to 9%; finally for those with the lowest scores, 500 to 559, the rate jumps to 9.82%.

On a $150,000 mortgage, your payments will be between $926 and $1411, a $485 difference per month.

Additionally, those in the lowest tiers will face higher loan origination fees.

Most bankrupts will be in the 650 area - if they behave themselves - within two years of bankruptcy. You will save a lot of money if you push your score above 675 before trying for a mortgage.

These numbers are not written in stone and vary from lender to lender. According to some news accounts, you can qualify for the lowest rates with a score of 620, but proof of that is hard to find.

Auto Loans

You will not qualify for zero or low APR financing offered by manufacturers. You will have to deal with a sub prime lender and will be charged rates in the 21 to 24% area.

Again, loan origination fees may be high.

Credit Cards

Interest rates will be high up in the 30% area. If that was not bad enough, bad credit risks face fees that can choke an elephant.

Fees commonly charged to those with poor credit include the following:

Setup fee - while you can find some lenders that may not charge a setup fee, fees between $29 and $49 are not uncommon.

One time fees - these can be as much as $100

Account maintenance fees - $6 or $7 a month

Annual fees - $35 to $150

Bad credit credit card fees can easily run over $250 the first year, a little bit less after that, if you are not careful.

Other Hidden Costs

Bad credit can ruin your chances of getting a new job if you employer checks your credit report, which many do.

Some auto insurance companies will charge you higher premiums if you have bad credit.

Your utility deposit may be higher than for those with good credit.

You may not be able to rent an apartment, if the landlord doesn’t like your credit.

Even though just about anybody can find credit, no matter how bad their credit score, that doesn’t mean it will be inexpensive, or even affordable. It pays to shop around and read the terms of any offer of credit very carefully.

Rebuild your credit. Pay all your bills promptly and without fail. Only use a portion of your available credit, 20 to 25%. Avoid applying for new credit.

Within two years or so, if all goes well, you may qualify for better credit terms.

For more information on credit and the ways to find the best deals, visit http://www.credit-yourself.com/financial-services.html

Chris Cooper, a retired attorney, and his wife Aileen, who has an MBA in Finance, provide personal financial planning advice at Credit Yourself - http://www.credit-yourself.com

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As much as people try to avoid financial troubles, they cannot help it if these troubles find them. Tight financial situations are the very reason why companies offer bad credit mortgages. With such arrangements, people have a way out of their financial difficulties.

Bad credit mortgages are very helpful to people who want to clean up their messy credit history. Along with that, these mortgages also provide them with the chance to climb up the financial ladder.

How do these bad credit mortgages work? Just like any kind of mortgage, interested parties must have some property that they could use as equity. However, this time around, there is greater flexibility when it comes to securing such a mortgage.

How do these bad credit mortgages assist you in cleaning up your credit? By taking advantage of this kind of mortgage, you will be able to pay off any other existing loans and bills. When you have done so, you will have an easier time untangling yourself from debt. This is because the only thing that you need to pay off will be the bad credit mortgage. There is no need to go through creditors? calls.

Companies who offer bad credit mortgages do not only provide much-needed financial funding but also give their clients additional support in deciding which packages are best for them. Credit mortgage experts evaluate a client?s financial situation and recommend a particular package that best suits his needs.

You should first do some research regarding the different companies and the range of packages and programs they offer. Once you have gathered all the information you need, you will actually be able to compare the various packages and their benefits. As a result, you can find the right kind of bad credit mortgage that will suit your needs as well as improve your capability to pay.

Bad Credit provides detailed information on Bad Credit, Bad Credit Loans, Bad Credit Credit Cards, Fix Bad Credit and more. Bad Credit is affiliated with Bad Credit Auto Refinancing.

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