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We asked the experts to find out the best types of loans for consolidating debt for people with poor credit.
RATE SEARCH: Get Cash Using Your Home Equity A debt consolidation loan is a personal loan that pays off multiple debts, such as credit cards and student loans.
You can transfer the balances of the high interest accounts to the no interest card.
This will help you pay off the debts much faster and save a lot of money in interest.
A debt management plan, or DMP, is offered by credit card debt consolidation companies. What happens in a DMP is your cards will all be closed.
The company you choose to work with will negotiate your interest rate down and set up a repayment plan. You will pay one fixed monthly payment to the consolidation company that is then dispersed to your creditors, minus their fees.
If you have been with the same credit union for a long time the likelihood of getting approved for a debt consolidation loan with poor credit is increased.However, these loans will require good credit history, usually at least a 660 FICO score or higher is required.But this is one of the cheaper debt relief options because it’s a low-interest loan.Many people use the money from a home equity loan to pay off credit card debt.A cash out refinance is similar in a way to a home equity loan.
If you have low average to bad credit (below 660 credit score) you may still qualify for a debt consolidation loan but the interest rate will be high.