Bad credit has reached epidemic proportions in the United States, and as a result many Americans are resorting to bad credit consolidation. Although bad credit occurs for various reasons, such as late mortgage payments or inability to pay school loans, the vast majority of individuals are in trouble due to mismanagement of credit cards. Being late by even one day can result in penalties, perpetuating the cycle of late payments due to high fees and high fees due to late payments. This inability to manage ones credit cards can result in overwhelming debt. For many, card debt consolidation is the only solution.
If you have ever encountered the demise of finances due to credit problems, you know that it is a slippery slope. It begins by missing one or two payments. Even if you are a day late on your payment, a late fee charge appears. In addition to this fee, there are always troublesome interest rates that accumulate as the unpaid balance lingers.
Credit debt can accumulate with alarming speed, and one can become quickly overwhelmed. Many people, when faced with unpaid credit, react instinctively and get another credit card to pay off the first. This is a prime example of the cure being worse than the illness. Using an additional credit card as a form of card debt consolidation is the equivalent of robbing the left hand to pay the right . It may be convenient and work for the short term, but inevitably the individual will become more mired in debt. For these people, bad credit consolidation consolidation can be a way to eliminate debt.
After this cycle goes on for a while, a credit rating becomes awful, making it nearly impossible to have a loan for a car or house approved. Collection agencies may begin making harassing calls, intent on getting you to pay your debts regardless if you have the money or not!
Finally, this is the point where many people choose to pursue a bad credit consolidation. Card debt consolidation simply means that you combine all of your debts, the ones that have snowballed out of control, into one big debt. The benefits to doing so are numerous. For one, you gain the knowledge that someone is helping you pay your debts. All you have to do is make one monthly payment to the consolidation company and they distribute the payments to your creditors.
Another benefit to consolidating your debt is that your consolidation debt (the final product of the process) is much easier to manage. Your interest rate is low and fixed, while you end up sending out just one payment each month. You will still have debt, but it will be much more manageable. Remember that this can be a very important step towards fixing your financial situation.
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where can I find a credit card company that will give credit cards to people with bad credit?
my boyfriend is currently paying off everything that he has had gone in collections he has paid off 3 credit cards and has 3 to go. He has done payment plans with them. He tried to get a credit card today he was sent an offer but was denied... does anyone know any credit cards that will give credit for those with bad credit he is currently paying off what is in collection so I am sure that is good. Thanks!!
Answer
Paying off old collections can actually hurt his credit score, since it is bringing the accounts to current status, however lenders will look upon his paying off the collections favorably.
He needs to rebuild his credit before applying for unsecured credit cards.
Go to his bank open up a savings account, tell his banker that he wants to re-establish his credit, then take out a loan against the savings account. Repay the loan for a period of 12 months.
Also he should get a secured credit card, he can get one from his bank, they will require a small deposit like $200 -$300. Make sure and pay off his balances in full each month.
After a few months he could apply for a unsecured credit card. Again make all payments on time, and paying off his balances in full or keeping below 30% of the cards limit.
It will take at least 24 months of consistent on time payments to re-establish his credit.
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