When the economy is in shambles, people, or more specifically, their sources of living are greatly affected. There are those who are retrenched involuntarily and lose their source of income. People who make their living by running some business that also suffers with slack sales as a result of the economic slowdown. Some businesspeople can’t sustain their operations and ultimately go bankrupt. Such scenarios force these individuals to default on their credit which ultimately leads to unfavorable credit histories. This is the reason why they have difficulties finding lenders to pay off their existing accounts which have become due. Even debt consolidation loans for a low credit score are hard to come by for them to apply for. These are the bad effects of the economic crisis that has been haunting many people in different countries.
The Economy Affects Credit Scores
The individual’s credit score is indirectly affected by the state of the economy. When the times are good people tend to improve their credit score with timely payments. On the other hand, when the economy is in bad shape, it has a telling effect on the credit scores of many individuals. A capacity to pay is affected by one’s income. If he receives a bigger paycheck there’s a greater chance that the bills are paid on time. When he is jobless, the payments for credit cards are postponed in order to meet more pressing personal and basic expenses for necessities.
Survival is always the priority when hard times knock at a door. It is the natural reaction for most people. Suddenly, when this kind of difficulty arises, lenders tend to become stricter when it comes to credit scores. Although you might be able to secure a loan, the interest rate is higher when your credit score is very low. Those who tried debt consolidation loans for low credit score have found this prevalent and have no option but to accept it. You cannot be choosy if you have bad credit.
Are There No Other Options?
If your various credit accounts are difficult to handle, debt consolidation loans for low credit score can be the perfect option. However, if you have to make a computation and compare the cost as against the amount that you are presently paying, you find it disadvantageous. The following options are available if applicable to your case.
Renegotiate with your lenders.
You can always approach your present lenders for a possible renegotiation. A car loan could perhaps be restructured. You can possibly work over refinancing of your home mortgage. You may settle some credit by taking out a cash advance with low interest. You’ll lose nothing if you attempt to renegotiate. Try it; you may save a lot of money in interest expenses and closing costs if you succeed with this option.
Revise your budget
Review your present income and expenses. You might discover some income that has not been properly accounted for. Your expenses could be probably trimmed down further. A 10% in additional savings that you can generate can mean a lot if you will only be willing to sacrifice some expenses. Use these savings to pay off your due accounts.
Raise funds by selling other properties.
If you have some other disposable assets like cars and real estate properties, perhaps disposing one or two of these can raise the much needed funds to settle overdue accounts and even your entire payables. This is the best solution as you are debt free instantly. However, don’t sell your properties at bargain prices. You can lose more than what you are trying to save in paying out all your accounts.
Work out a personal long term loan.
Find out if you can work out large personal loans without collateral. If you can raise that amount to settle your fast maturing obligations that will be a good step while negotiating other conventional loans. It could present some difficulties but you could try it anyway.
Although negotiation for debt consolidation loans for low credit score is possible, it is not a cure all solution to your present financial difficulties. The above cited alternative actions are better. Remember that under a debt consolidation scheme, your loans were only rolled into a new loan called debt consolidation loan. Your loans most likely remain the same but now as a single loan though with a lower monthly payment.