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Debt Consolidation Facts

1. If you spend more than 50% of your credit limit every month, this indicates to the Credit Bureau that you do NOT have enough cash on hand to meet your monthly expenses. This will identify you as a high credit risk and will actually reduce your credit score by 60 - 70 points overnight (Fair Isaac).

2. If you miss 1 or 2 payments on your credit card debt, the issuing company will skyrocket your interest rate to a whopping 27% - 30%!

3. Out of a random sample of 3 million American consumers (included in Experian's National Score Index), 51% of them have at least 2 credit cards and 14% of them have 10 or more credit cards.

Bad Credit Debt Consolidation

It is hard to find a lender who will finance your debt consolidation loan. This is because debt consolidation loans are high risk loans due to the fact that most borrowers go deep in debt after their first consolidation. However, you do have other options if you cannot find a lender for your debt consolidation loan:

The first thing to do is to ask your family and friends to see if they can help you out. Your friends & family could lend you money to pay off your student loan debts, car loan payments or other bills. If they cannot help you out, you can ask your employer for a grant or a pay advance so you can get your life back on track.

Another option is to go directly to your credit card company and ask for a lower interest rate or a lower term for the loan. If you have any savings left over, you could use these savings to pay off your debt. However, be careful when you take money from your savings. This is because you want to have some money left over for financial emergencies such as a loss of job, death of spouse or disability/injury. For example, if you have $12000 saved up right now and are in $15000 debt, you could take out $7000 from your savings and pay off almost 50% of your debt. This will also leave behind a decent $5000 in your savings account which could be enough for any financial emergencies.

Think of it this way. If you leave the $12000 in your savings account, you will be earning a 3-4% interest rate. However, if you leave the $15000 debt as it is, you will be paying an annual APR of 20%! Now which is better? Would you like to earn a meager 3-4% interest rate and pay out 20% of annual interest charges?

If all of this fails, the last option is a bad credit debt consolidation loan.