Simon Hopes
by on January 28, 2021

People struggling with debt always want a way out. But it can be tough to come by a solution that’s likely to work. Debt consolidation is one way people with too much debt can potentially get it under control, even with subprime credit.

There are a few advantages of debt consolidation.

First, by definition, debt consolidation is a process of taking several loans and combining them into one. This is going to make it easier for you to keep track of how much you need to pay each month and to whom. With one loan as opposed to many, there’s no ambiguity on this front.

Your interest rate is possibly the most important aspect in determining whether you’re able to repay a loan. Higher rates mean your debt can keep growing if you’re only able to pay the minimum each month. Consolidating can lower your net interest rate, making it less onerous to beat your debt.

Can You Consolidate Debt with Poor Credit?

There are several different ways you can consolidate debt. Not all of them function the same way, and not all people are eligible for every kind. Let’s start by looking at credit card balance transfers. This is one of the more common ways people consolidate debt.

Credit card balance transfers are a way you can take several credit card accounts and combine them into one. One benefit specific to credit card balance transfers is they typically come with a low introductory interest rate. This perk can help consumers pay down some of their debt without accumulating interest. It should be noted, however, you generally can’t get approved for many credit card balance transfers with bad credit.  While you might not be able to do a balance transfer with subprime credit, there are other opportunities.

What Are Your Other Options?

If you’re in too deep with debt, your first stop should be talking to a credit counselor. Credit counseling services can assist with budgeting and other basic financial services like getting a copy of your credit score. Conveniently, they can often help you out with consolidating debt through a debt management plan (DMP).

A debt management plan is where a credit counselor works with your lenders to negotiate better terms for fees and payments. Doing this can be an effective way to get out of debt through consolidation.

There are a number of other effective options to explore. Consumers will find helpful resources at debt consolidation services. You’ll find several additional ways to consolidate debts to help make them more manageable.

Among them are:

  • Debt Consolidation Loans – It’s possible to get a loan into which you combine several lines of credit into one. It can be credit cards, medical bills, personal loans, or other forms of debt. Doing this can vastly simplify your debt repayment, while giving you potentially better interest rates and lower monthly payments, even with average credit.
  • Home Equity Loans – You can use the equity you have in your house to help pay down your other debts. It should be noted that while doing this can be effective for beating debt, you do put your home at-risk.
  • Debt Relief – People with poor credit, or who are over their heads in debt might need something stronger than a consolidation loan. Individuals in this situation might want to look at debt settlement, which is where a debt relief agency works with your creditors to lower the amount you owe for a single payment in full. It should be noted that doing this requires you to stop making payments on your loans, which can hurt your credit, as payment history is the most important factor.

Debt consolidation is an effective way for many consumers to get out of debt. The good news is several options for consolidating debt can be done by those with subprime credit too.  

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