A debt consolidation loan for bad credit may not be the best choice for everyone. If your credit is preventing you from qualifying for a lower interest rate than you are currently paying, you may want to consider the following alternatives to debt consolidation.
Improve your credit first
Good credit has many benefits, including the ability to qualify for better financing. If you can’t get a good interest rate on a debt consolidation loan right now, working to improve your credit might give you more options in the future.
When creating your credit improvement plan, remember: You may want to adjust your approach depending on whether you are building credit from scratch or working to rebuild damaged credit. Either process can take time, but getting better credit can make your hard work worthwhile in the long run.
Use a debt repayment strategy
If you have some wiggle room in your monthly budget, a debt repayment strategy might be right for you. Do-it-yourself strategies like the snowball or debt avalanche method lead you to restructure how you pay down your debt each month. Ultimately, each approach has the potential to save you time and money in the debt elimination process.
Get professional help
Credit card debt and other high interest debt can sometimes spiral out of control. If you’re struggling to meet minimum payments on your monthly credit obligations, it might be time to talk to a financial professional about your situation.
A non-profit credit counseling company may have solutions that could help you, including a debt management plan. In extreme cases, you may even want to seek advice from a bankruptcy attorney regarding plans that can provide you with protection from your creditors.