June 20, 2024

 When financial catastrophe strikes, it is difficult to maintain a good credit rating. But the right debtcondolidation with bad credit can help you rebuild your finance portfolio and your credit rating at the same time.

This guide can help you get the right finance and rebuild your credit portfolio at the same time.

Checking your Credit History

I started rebuilding by checking my credit file. This document is the main reference that lenders look for when making a decision as to your creditworthiness. Whether you are suitable for a loan or not depend largely on your credit score, and other vital information contained in your credit report. Credit providers are particularly concerned of how much you owe; how frequent you apply for credit, the types of loans you obtained and how good you are in terms of repaying on time.

Lenders will turn you down

Don’t be disappointed. Each credit provider has its own set of criteria in determining your suitability for a loan. You may score differently from one lender to another. While they refer to your credit file in gauging whether you are suitable for as particular loan product, they have their own standards of suitability. For example, Lender X may turn down your loan application because you have very low credit history while lender Y may approve it based on your low utilization rating. Don’t think for a moment that there is a credit blacklist, because there’s none. So, if the first credit provider you approached disapproved your application, try with the next one, until you get approved.

Missed Payments

Third, check if you have missed payments on any of your loans or credit card and pay them off if you can. Remember that a person who pays on time will always be a preferred candidate even if you have a bad credit rating. So, always make sure that you pay on time or at least within 30 days after it falls due-before your credit provider submits it to the credit reporting agencies. Defaulting on your payment has a negative effect on your credit score as it implies that you cannot properly manage your finances.

Apply for a reasonable debt consolidation loan

Do you have a number of different debts with high interest rates? Consolidation can help you get a much lower rate for all your consumer debts, credit cards, and personal loans and even on your mortgage. You will also make it easier for yourself to pay because you only have one lender to think of. But, remember that a lot of people who opted for second chance loans like this ended up getting into debts all over again.

Here are some tips for those who want to consolidate their loans:

  1. Prepare for some lifestyle changes.
  2. Be aware of what at stake especially if you use your home equity for debt consolidation. Are you willing to exchange your home ownership for expensive vacations, clothes and probably your favorite cup of coffee?
  3. Cut out your credit cards. You don’t have to close them, especially if you’re still your credit history. But, don’t use them anymore to avoid overspending. Start using the money you actually have – if you can’t pay in cash or in check, don’t buy it. The interest rate and the collateral you attached on your debt consolidation loan are more costly than any purchase that you can live without.
  4. Remember that it is difficult to get out of debt, but life will be truly hard if you don’t escape from it. It takes more than your willingness to change. You also need to make smart choices, max out your patience and practice self-discipline with determination.
  5. Share your real situation with your family. There’s nothing wrong in asking your family or your partner or spouse that finances are not easy for you right now. This way, they will know that as much as you want to spend quality time with them, they cannot expect you to spend more money until your finances get right back on track.

Visualize your goals

Where do you want to be in ten years? If you’re dreaming of financial stability, it is important to note that there is no clear-cut formula for success. There are only things that you can do to get there, one step at a time. Debt consolidation is only one of the many steps to financial freedom. It helps you pay off your loans in a more convenient and cheaper way. But, don’t overlook the fact that the most powerful tool to achieve financial freedom is always at your disposal-You. It is in your hands.

Most importantly, know that there are financing agencies that are willing to help you get through difficult life situations like NSW Mortgage Corp. Learn more about our debt consolidation loan package and how consolidation can give you a more satisfying life. Enquire now.

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