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People in Las Vegas fall into debt for all sorts of reasons, some of which are unavoidable. Maybe they needed to use credit to pay down outstanding medical bills which they could not afford otherwise. Maybe they needed to rely on their credit cards to make ends meet for their families in a particularly cash-strapped month. Maybe they just couldn’t say no to a new outfit or a lavish night out and their spending got the better of them.
Here’s the thing, though: when it comes to your creditors, most of them don’t really care why you had to go into debt. They just want their money. And if you’re starting to run behind with your minimum monthly payments to your creditors, then it doesn’t matter what kind of debt you’ve managed to accrue. They’re going to start to harass you and threaten you, demanding that you make your payments now.
Even worse, if you continue to fail to keep up with your payments, then your debt is going to start to negatively affect your credit score. Your credit score can affect all sorts of life-changing things, like buying a house, getting a job, financing a new car and more.
To make matters worse, having a bad credit score may actually limit your access to one of the most effective tools for paying down your debts in an affordable and efficient way: a debt consolidation loan. If you have bad credit and you’re struggling to get out of debt, then, it’s time to consider all of the options that you might have if you live in Las Vegas.
What does bad credit have to do with debt consolidation?
Your credit score, in general, is meant to be a measure of your creditworthiness. Simply put, it indicates to credit card companies and lending institutions whether you’re a safe, reliable investment of their funds or a financially irresponsible liability who won’t be able to pay back the money that you owe.
When you are struggling with a significant amount of debt, especially debt to a variety of different creditors, then it’s far more likely that you’re going to end up with a bad or falling credit score. There are two major reasons for this.
The first is common sense. If you owe a lot of money to a lot of different people, and you’re supposed to be making multiple monthly payments to all of these different entities every single month at different times and in different amounts, then you are constantly running the risk of falling behind. Maybe you can’t make ends meet; maybe you just forgot because you were dealing with other aspects of a hectic life. But when you fall behind on your monthly payments, you can be certain that your credit score is going to take a hit. After all, your ability to pay back your debts is exactly what your credit score is intended to measure.
The second reason that your credit score might falter when you’re in a sizeable amount of debt to multiple different lenders is something called your “utilization ratio.” Basically, your utilization ratio measures how much of the credit that is currently available to you that you’re using. While lenders like to see that you’re willing and able to take on reasonable amounts of debt and pay them off, if you’re using a high percentage of your available credit for an extended period of time, it may end up negatively affecting your credit score on the whole.
So we know that owing a lot of debt to multiple different creditors has the potential to drag down your credit score. Why does this affect your ability to seek debt consolidation?
One of the most popular ways to seek debt consolidation is to take out a loan from a reliable lending institution. This loan is then used to pay off all of your other debt at once, consolidating your monthly debt payment into a single payment that is often more affordable and carries a lower interest rate than other forms of debt. You save money in the short- and long-terms while working towards eliminating your debt entirely over the term of the loan.
If you have bad credit, though, responsible lending institutions are much less likely to approve your application for a loan, or at least a loan that’s going to do you much good. After all, to those lending institutions, bad credit indicates that you’re an unsafe investment, which takes away their incentive to lend to you in the first place.
That doesn’t mean it’s impossible to find a debt consolidation loan when you have bad credit. It just means that it may be extremely difficult to find a loan with terms that are going to be acceptable for your situation.
For instance, a bank might offer a loan to someone with bad credit but saddle it with an extremely high interest rate that doesn’t make financial sense to accept. They might also ask that you tie the loan to some form of collateral, like your car or your home. This is called a secured loan and it’s a perfectly acceptable practice, but it can make taking on the loan extra risky, since you could lose one of your major assets if you fall behind on your payments.
If a lending organization seems over eager to lend to your when you have bad credit, you should probably be wary as well. While there are plenty of reputable lenders out there that will want to help you, many of disreputable lenders tend to prey on people with bad credit, since they know that they won’t have many other options when it comes to seeking their debt consolidation loan.
If you can’t find any good options for your debt consolidation loan in Las Vegas, though, you still have choices. Here are the top 3 bad credit debt consolidation programs in Las Vegas that may be able to help you out.
Balance Transfer Credit Cards
If you have questionable credit but aren’t actually in a huge amount of debt, then a balance transfer credit card might work for you.
With a balance transfer credit card, you apply for a new credit card with a low introductory APR offer (ideally, a 0 percent introductory APR for a significant period of time).
Much like the debt consolidation loan, you use that credit card to pay off all of your other debts, consolidating the debt onto a single card with a single payment. Then, you get to work on paying down that card.
This method only really works if you’re able to make a significant dent in your total debt within the introductory offer period. The idea is that you’re able to find and qualify for a card with a 0 percent introductory APR, which stops interest from compounding on your total balance for a while. Without compounding interest, every dollar that you pay towards paying down your card goes to paying down your debt, not just lessening the blow of the interest that compounds each month.
Balance transfer also only really works if you can resist the temptation to use credit while you’re paying down your debt. For some people, it’s hard to keep themselves from using the credit that they’ve freed up, especially when they know that it isn’t currently compounding interest. So they end up using the credit card, driving themselves deeper into debt and squandering the limited amount of time they have to pay off the card without interest.
Sometimes, these credit counseling plans can focus on keeping up with payments, sticking to a budget and allocating an increased amount of your income towards paying down your debts. In cases like these, the credit counselor is providing structure and guidance, but a lot of the work is still on the individual who is in debt.
Often, though, credit counselors can help indebted individuals to enter into a debt management plan that can sometimes feel a lot like a debt consolidation loan. With the debt management plan, individuals make a single payment, often at a reduced interest rate, to work towards paying down their debts. At the end of the plan, individuals often end up paying less than they would have otherwise to get out of debt.
All of that said, it’s important to remember that not all credit counseling agencies are the same. Nonprofit or not, some are more reputable and more effective than others. Before you enter into a credit counseling relationship in Las Vegas, make sure you do your homework and that you feel comfortable with your counselor.
Debt settlement has many forms, but the basics are essentially the same across the board.
With debt settlement, you’re essentially trying to work with your creditors to pay less than the total amount that you owe. Whether they take the deal or not is up to them, but you’d be surprised how often they’ll spring for it. After all, getting paid something is better than getting paid nothing, even if it’s less than the full amount of your debt.
While it’s possible to seek debt settlement on your own, many individuals in Las Vegas work with professional debt settlement companies to pay down their debts. While many of these companies aren’t especially trustworthy, it’s not too difficult to find someone reputable to work with if you do your homework.
Often, working with a debt settlement company works like this: you set up a special savings account with the company. Each month, you pay a set amount into that savings account, building up a large lump sum of money over a relatively short amount of time.
Within that period of time, you stop paying your creditors altogether. Not only does this free up money for you to put into the savings account but it shows that you’re serious about pursuing debt settlement. While your creditors won’t love the fact that you’ve stopped paying them, a good debt settlement company can help you to manage the harassment a bit.
Often, you’ll also need to close your credit cards during the repayment process. This ensures that you won’t continue to rack up debts and helps to put you on track to better financial health.
At the end of the payment period, the debt settlement company approaches your creditors with an offer: take the lump sum payment now that you’ve saved up in your savings account and forgive the rest of the debt.
It’s not guaranteed that your creditors will accept the payment, but you’d be surprised at how often they do.
If you’re curious about debt settlement or any other bad credit debt consolidation programs in Las Vegas, read more into what National Debt Relief can do for you, check out our reviews and contact us today!