Taking out a debt consolidation loan is pretty much a game changer when it comes to paying your debts. It makes payments smooth, hassle-free, and it could sometimes save us some money. But if you have a bad credit score, this type of loan may not be an option for you.
However, it should be noted that having a bad credit score does not necessarily mean that you will never be granted a debt consolidation loan. You can get approved, but the catch is, your interest rate will be very high. So if it still does not work for you, let’s take a look at the alternatives to help with consolidating debts.
Home equity loan
Some may refer to it as a second mortgage, this kind of loan basically utilizes the equity that you have built for the house that you own. The equity will serve as collateral for a loan that can be used to pay your debts. Home equity loans will have a lower interest rate but will require a good credit history.
Transfer balance to a low or zero interest credit card
If you have multiple credit card debts, try to look for a promotional offer for a new credit card with low or zero interest. These new cards usually can offer this interest rate for the first 24 months. So you will have plenty of time to take advantage of the offer. Transfer all the credit card debts to this new card and pay them off bit by bit.
Not a popular choice for borrowers, but sometimes it’s the only one we have. You’re ailing credit score will take a big hit should you opt for this alternative. But at least, your debt will be chopped off by the debt settlement company. So you will only have to pay a portion of the sum.