Have Bad Credit? Easy tips for debt resolution
Having a bad credit is a concern but it’s not that high when compared to the previous times when none of the lenders would agree to approve your loans on any condition whatsoever. Things have changed with the coming of a lot of lenders in the market and increase in the number of people with bad credit owing to recession and bad economic condition across the globe.
With the changing lifestyle, people are bound to have multiple debts which they often think of clearing over a period of time assuming that their financial condition will improve with the coming times. However, in the wake of the financial crisis things are getting difficult even for the wealthiest of the lot and continuing on the repayments of the debts is often seen cases of bad credit.
Resolving debt situations with bad credit loan
When you are faced with the payment of multiple debts and do not know where to start from, one could evaluate the use of bad credit loan to get rid of some of the debts. Credit card debts often carry very high interest rates which keep compounding and eat up a lot of one’s budget till they are cleared in full. Bad credit loan is not a cheap option when compared to other loans, however when pitched against the credit card debts interest rates on the bad credit loans are much cheaper thereby making it one of the options to be used to clear the ever increasing burden of the credit card debts which keep on increasing your debts each passing day. One can repay their credit card debts in full by the use of bad credit loan. However, it is to be taken into consideration that the loan amount under the bad credit loan is usually small and hence one can use this to repay any other loans too.
Ways to resolve the debt situation
Understand your interest rate on the debts and try and reduce them at the earliest. The lower interest rate would mean a major portion of your EMI contribution towards the repayment of the principal which would help you overcome the debt at the earliest. Here is what you can do:
- Depending on your credibility request the credit card company for lowering the interest on your credit card or replace the same with another credit card bearing lower interest rate.
- Go for the balance transfer and try and clear your credit card debts in the offer period which has a much lower interest rate applicable.
Take the debt consolidation route to settle your debts
- Debt consolidation loan allows one to settle all their previous dues. They will be required to pay one single large loan with minimized monthly payments and a lower interest rate.
- One can opt for a line of credit instead of taking the full amount; regularize their payments through automatic transfers.
Using a debt consolidation loan one can easily get rid of maximum debts which surround them; however there are still some which are left. One needs to build a strategy to get rid of them as well.
Pay off your highest interest loans first
High interest loans are often those which build up over a period of time. So experts are of the opinion that we should deal with the high interest loans first. This strategy might work well with those possessing good amount of cash and who can repay the debts once identified.
Pay smaller loans first
Once you have taken the consolidation loan and settled majority of your loans , it is mandatory to eliminate the rest of the loan pending. For this one should classify and identify the loans which are smaller in amount and clearing them one by one without much disturbance to your budget. One can find that within a short period of time they have got rid of the other loans too.
Thus if you have huge debts, analyze and build a plan for debt resolution which could see you through these debts.
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