| If
you have a lot of debt, there are two very common solutions. Obviously a debt
consolidation loan would be one solution. You go to the bank and borrow one
large amount to pay off all of your smaller debts. A debt consolidation loan makes
sense if you can borrow at a lower interest rate than what you are currently paying
on the credit cards you want to consolidate.
| | | But what happens if you
don't qualify for a credit card debt
consolidation loan? There are many reasons why you may not be able to
get a debt consolidation loan, including insufficient income or no collateral
to pledge as security for your loan. In fact, you may be denied a debt consolidation
loan simply because you have less than one year at your current job, or because
you have only lived at your current address for a short period of time. |
If my credit is not good enough to get a debt consolidation loan,
can I try credit counseling?Yes, even if you have bad credit, you may
be a candidate for credit counseling. Consumer
credit counseling typically involves a credit counselor contacting your creditors
to work out a repayment plan on your behalf. These plans, called a debt
management program or a debt
management plan are a great way to make a deal with your creditors. To get
a debt consolidation loan the bank must approve your credit. In credit counseling,
each individual creditor approves your debt management plan. The best part is
that they don't worry about your credit
score, or your work history, or many of the other factors that go into the
typical credit decision. In credit counseling, the creditors will almost always
accept your proposal, because they know that if they don't, it is possible that
you will not be able to pay them, and you will be forced to declare bankruptcy. Credit
counseling is not the solution for everyone. If your creditors accept your credit
counseling proposal, there will be a note on your credit report indicating that
you made a deal with your creditors. That note may make it more difficult for
you to borrow in the future. That's why, if you qualify for a debt consolidation
loan, that is normally the best option, because you preserve your good credit.
To
determine which option is best for you, research your options. You can learn more
about credit counseling at www.credit-counseling.org,
a web site devoted to providing information about credit counseling, or by using our search tool:
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