8 Best Debt Consolidation Loans for Credit Score 500

Having a low credit score can either result in the denial of loan applications or suffering from high interest rates. If you have, say, a credit score of 500, you are considered to have a poor FICO score and many lenders might deny you loans. Nevertheless, this should not discourage you from trying, especially if you are in desperate need. In such a situation, your best bet would be a debt consolidation loan that should solve many of your current problems.

View Best Debt Consolidation Loans for Credit Score 500

Why you should consider a debt consolidation loan

It can be very difficult trying to pay off multiple debts from different lenders. When you have a credit score of 500, things get even worse because of the high interest rates you get charged every month. The purpose of debt consolidation is to help you pay off all existing loans with a one-time payment and be left with a single loan to pay back. There are many advantages to doing this, and that is why you should consider one today.

Improves your credit score

With every timely payment, your FICO score goes up. Therefore, if you use your debt consolidation loan to pay back existing loans, your credit score goes up, and this can have a multitude of benefits. From getting favorable payment terms in the future to qualifying for higher loans and even some landlords demanding a credit check, it can only be beneficial to improve your credit score.

Easier loan payments

Can you imagine having to keep up with three or more lenders on your back? Worse still if your loans were taken with variable interest and the amounts keep changing. By leaving only one loan to be repaid, it becomes much easier to pay back the debt. Moreover, you might receive better payment terms and period that is more manageable to your budget.

Are there any disadvantages?

Perhaps the only problem with these loans is the difficulty in getting a loan with a 500 credit score. As this is considered a poor score, you may have some difficulty getting approved. That being said, about 20% of auto loans were reported to be given to individuals with a 520 credit score, so it is still possible. But that loan will come at a higher interest rate than average, and you may end up paying a lot over the repayment period.

What are the 8 Best Debt Consolidation Loans for Credit Score 500?

Despite the difficulty in getting a loan while having a 500 FICO score, there are still lenders who will issue debt consolidation loans.
See Subprime Debt Consolidation Loans for information on what you can do if you have a low credit score.

These lenders all have varying criteria, so the key is to keep applying until you receive approval. Don’t worry about the impact on your credit score because these lenders only do a soft credit check to determine the interest rate and this will not affect your credit score.

How much can you borrow?

There is no fixed amount one can borrow in the form of a debt consolidation loan, but the general rule of thumb to be awarded is equivalent to double your annual income. However, due to the 500 credit score, it would be difficult to be awarded any more than $10,000.

Although some salespeople may advertise guaranteed approval on loans despite credit checks, you should know that this simply does not happen. All lenders must conduct a credit check, but their varying requirements could still give you a chance to qualify for a debt consolidation loan.

Leave a Reply

*