When you have outstanding bills but you do not have a financial capability to pay them, the best approach is to ask for a debt consolidation loan. Debt consolidation allows you to save money and focus on making more money and paying your debt in monthly instalments.
The thing is, debt consolidation may not be accessible to everyone. If you have a poor credit score, chances of you getting the loan approved are close to zero.
What happens when your debt consolidation application is not approved?
Go for a credit counselling programme
A credit counselling programme will help you stabilise your financial life. The best thing about counselling programmes is how they are accessible to everyone, even if you have a bad credit history and a poor credit score.
In credit counselling, you sit down with a credit counsellor and look through all your finances. The counsellor then helps you identify the root of your debt problems. The next step is to help you come up with a budget or spending plans that will get rid of your outstanding debts. Some counsellors come up with a debt management plan where they negotiate with the creditors for a waiver on penalties in return of a consistent repayment.
Pay the debt on your own
People seeking debt consolidation loans may not really need them in the first place. People may think that eliminating a loan without the help of another party is difficult but that is not the case. If you want to eliminate the debt with your finances you have to make a budget first.
First, calculate all your monthly commitments that you must pay and subtract it from your income to get a disposable income. The disposable income may vary each month so you have to make this budget monthly. If you have enough disposable income, you can use some of it to pay off the loan each month until all the payments are complete.
A credit transfer
You can move the money from one or more of your credit cards to the card with the outstanding bill to consolidate the debt. One advantage of doing a credit card transfer is that the credit won’t compound any interest for a couple of months.
For this to work, you must complete the card balance before interest begins to accumulate and prevent it from growing into another debt. A credit transfer may not work for you if you have a poor credit score and if you are not careful, it will damage your credit further.
You can ask for a debt settlement from your creditors
In a debt settlement, you attempt to negotiate with the creditors for a reduced payment. Normally, the debt settlement is made in one single payment. The good news is, you can pursue a debt settlement if you have a poor credit score. With settlement, you can clear your debts fast and save your finances for other things. The debt settlement is handled by a third party, who manages your accounts and savings to pay off the debt.
A bad credit report can ruin your chance of getting a debt settlement loan. you can use these method above as an alternative to pay off your impending loans.