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If you have amassed a rocky credit history and if you are burdened with a low credit score


Dealing with Debt: Debt Consolidation

If you are looking for a way to deal with a bad credit issue in your life, you do have a number of options.  In this regard, when considering ways in which you can deal with bad credit issues, you might want to consider some type of debt consolidation loan.  There are a number of different options that are available to you when it comes to bad credit issues.

Debt consolidation can seem like a solution to all your overwhelming debt problems. While it’s not the be-all and end-all to debt resolution, it can help to reduce high-interest loans and credit card payments—and, there are many choices in how to do it.

Personal Loans

Personal Loans.  Those with good credit can qualify for unsecured loans and pay off higher-interest debt. Rates for bank loans at first glance may seem high, but with credit card interest currently hovering around 20%, it’s still good news. Just make sure the interest and other costs of this loan will be less than what your paying now for your many debts.


 


Home Equity Loans

Home Equity Loans. This low interest loan is often an attractive way for people to consolidate their debt. Often it’s not only lower than the bank loan home refinance loan, the interest is also tax deductible. Just remember that this could increase your home payment considerably, and if you are unable to make payments, you could lose your home.

Refinancing

Refinancing. This term covers a lot of ground. You can refinance your home or other properties for more than what you still owe on them, and use the money you’ll get back to pay off your other debt. However, although the interest rate may be lower on a home loan, over the course of the years it adds up. Make sure this step will benefit you and is your only option. As cautioned above, you could lose your home if you can’t keep up with the higher payments.

Negotiations with Creditors

Negotiations with Creditors. Most of the time, credit card companies and other creditors are happy to work with you on new payment terms. Some companies allow their telephone agents the leeway to negotiate those terms with you on the phone. If you don’t feel you are capable of dealing with the negotiations, you can hire an attorney—or sometimes even a law school student—to make the calls for you.

Zero-percent Credit Cards

Zero-percent Credit Cards.  Initially this seems like a perfect solution: borrow from Peter at 0% to pay Paul at 20%. Often this works for smaller credit card debts, but make sure you know when the 0% offer expires and what will happen when it does—this plan can backfire and leave you paying more interest than before if you don’t get it paid off in the 0% period.

Once again, these are all options that you may want to consider when it comes to dealing with issues pertaining to bad credit.  In the end, by utilizing one or another -- or a combination of these options -- you will be on your way to bettering your credit and to dealing with bad credit related issues.  You will be able to begin building a better financial future for you and your family.