Consolidating debt loans with bad credit

Trying to consolidate your debt with one of these lenders could leave you in a worse situation than you were in before the consolidation.

Then again, even the higher rates from one bad credit loan might be far better than what you’re paying on your bad credit debt.

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Ideally, this new loan will have lower rates than the original loan or lower monthly payments. Oftentimes, though, you’ll be asked to choose between the lower monthly payments and paying more in interest overall—even with lower rates.

A longer term on a loan means lower payments, while a shorter term means less interest will accrue.

That information is then fed through an algorithm created by the FICO corporation to create your credit score, a three-digit number that expresses your perceived trustworthiness as a borrower.

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.

In choosing between the two, it’s really about what’s right for you.

If you’re applying for a debt consolidation loan that has a higher interest rate than your current debts monthly payments that you can’t afford, then you shouldn’t take out that loan.So now you have more debt and a lower credit score which will make getting a personal loan harder.One way to help manage your debt is to take out a debt consolidation loan, where you get one big loan to pay off all your smaller ones.The next factor, worth only a little less at 30 percent, is your amounts owed.This is, as the name suggests, the amount you currently owe to your various lenders.While simplifying your debts is a good thing—allowing you to make one payment each month instead of many—paying more money in order to do that is not.

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