Bill Consolidation Loans
What is a bill consolidation loan?
Bill consolidation loans are also called debt consolidation loans or bad debt consolidation loans. It is a loan given to someone who has a number of debts in different amounts and on different repayment schedules which make it difficult or impossible to meet all of their obligations when due. The premise is that the total amount of debt may be manageable, even though the current structure of that debt is not. A bill consolidation loan pays off the multiple creditors you currently have (often with some discount on those debts) and leaves you with one debt, one interest rate, and one payment schedule which you should be able to meet. Almost always you will have to give up all other credit sources (credit cards, lines of credit, etc. as a condition for receiving the loan. Obviously, the new lender does not want you to dilute your ability to pay back the consolidation loan by taking on new debt from other sources. NOTE: This condition can be enforced. Credit reporting agencies will notify the lender if you apply for credit elsewhere.
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Who qualifies for bill consolidation loans?
To qualify for a bill consolidation loan you will need to have a steady source of income, normally a stable job. You will have to make enough that you have funds available to repay the consolidation loan after taking care of your living expenses. Those with a poor credit history can get these loans but adjustment may need to be made in your current expenses. You’ll need to speak with a bill consolidation counselor to determine the best course of action and how they can assist you. There may be additional conditions that limit your spending on certain items, but if there is not some money left to pay debts after meeting your living expenses you are unlikely to qualify for a loan. You will also need some positive payment history to show that you do try to pay your debts, but were simply overwhelmed by circumstances. That is why a stable job history is crucial. If you seem to be an individual who walks away when things get tough most lenders will not be interested in doing business with you.
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Will a bad credit score keep me from getting a consolidation loan?
While a bad credit score will probably not keep you from getting a consolidation loan in and of itself, it certainly will affect the terms, and timing, of any loan you are able to get. If your score is too bad you may be told to come back when it has improved. Obviously, by the nature of bill consolidation loans, people with great credit scores are unlikely to need apply for such loans. Your score may determine what interest rate you have to pay, what security is required, and what other conditions and restrictions on your finances you have to accept to get a loan. The lender may also require a co-signer on your loan. If you can get a co-signer that will help you, but it puts the co-signer at financial risk, so you may have difficulty finding someone willing to take that risk. They may have conditions of their own, especially if they are your parents or other family members. If you are the type to resent other people trying to control any part of your life, co-signers may not be a good idea. The alternative is to try to hold it together long enough to qualify for the loan.
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