Personal Loan to Consolidate Debt Bad Credit

Are you drowning in credit card debt? If so, you may have an option to get you out from under the burden of all those minimum payments.

Here we go over everything you need to know about using a personal loan to consolidate debt and bring your bad credit score back up.

What Is a Debt Consolidation Loan with Bad Credit?

A debt consolidation loan is a personal loan that you intend to use to pay off all those debts that are dragging your credit score through the mud.

Say you have 12 different credit cards, all with high revolving balances, and each of them has a minimum payment of $100. That’s $1,200 a month just to deposit the minimum fees—but we all know that you have to pay more than that to even have a chance at ever paying those cards off.

So, you get a debt consolidation loan in the amount of your total credit card debt, pay off all those high-interest cards, and now only have one monthly payment that is much less and at a much better interest rate.

It sounds like a great idea, right? It is — if you can find the right lender and get approval for the amount you need.

How Does Debt Consolidation with a Personal Loan Work?

Getting a personal loan is as simple as walking into your bank or applying online with a reputable lender.

The lender will ask for all your information and perform a hard credit pull to check your credit score. After evaluating your application, they’ll let you know if you’re approved as well as how much you’ll be able to borrow.

Getting a personal loan is a good idea if you have credit card debt, even if you can’t get the total amount you owe. Why? Because you’ll still be able to pay off some of the cards. When you have poor credit, your credit cards typically have interest rates in the high 20 percent range or even higher.

The average personal loan has an interest rate right around 12 percent, making it a much more appealing choice than keeping that revolving debt loop churning.

How to Get a Debt Consolidation Loan with a Low Credit Score

Getting a debt consolidation loan with a low credit score can be a bit tricky. You’ll need to find a lender that specializes in helping people with poor credit get out of debt.

There are tons of these lenders out there, but how do you know if they are reputable? You can use our guide here to find a great lender.

Apply strategically to these lenders. Start with the ones most likely to approve you. Every time a lender pulls your credit report, your score decreases just a little bit. So, you want to get the process done with as few credit-pulls as possible.

Benefits of a Debt Consolidation Loan

If you’re facing tons of revolving credit card debt, paying that off is a daunting prospect. One of the best reasons to go for a debt consolidation loan is to relieve the pressure from keeping track of all those monthly payments and take advantage of a lower interest rate in the process. Best of all, you can finally feel free from debt.

While you’ll still owe the money, it will be condensed into one lump payment, which is usually much lower than what you were paying on the minimums for your credit cards. You’ll also have freed up all the funds on your credit cards, making your credit-worthiness increase dramatically.

You’ll be saving money each month, building your credit score, and working towards a more stable financial future.

Personal Loans Are a Great Way to Consolidate Debt

Using these loans responsibly and paying off those credit cards can be a breath of fresh air to your financial profile. You’ll get out from under the pressure of all those payments and be able to get out of debt successfully.

If you leverage this new money correctly, you can turn your whole life around.

Are you ready to consolidate your credit card debt by obtaining a personal loan? We can help you.

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