When you’re trying to qualify for a debt relief program, but you have bad credit, it can really work against you. Some debt relief programs can actually make your credit worst.Whether they use deceptive practices or charge exorbitant amounts of money for their services, they may be the wrong choice. But don’t despair just yet.  There are some other options available if you have bad credit. The following will explain how.

 

Bad credit and debt are close relatives, which should come as no surprise when you consider that accumulating an excessive amount of debt is what bad credit is attributed to.  So, what do you do? If you’re thinking about filing bankruptcy, STOP!  Believe it or not, there are some loan options that might be available to you, some of which are even tolerable.  Consider the following:

 

Start with your bank first – if you have a checking account, savings account, or a checking and savings account then you’ve already established a relationship with that bank.  They’re hoping you stay with them for the next 20 to 25 years. So, this might just work in your favour. Getting a personal loan from them is a win-win for both of you.

 

Apply for a debt consolidation loan – banks and credit unions may give you a loan to consolidate all your debt into one monthly payment.  Just be sure that the interest rate is lower, and the terms don’t put you further into debt. You might want to talk with an expert before you take a loan.

 

Ask a family member or a friend for a personal loan – this is a best/worst choice scenario in that missing a couple of payments could cost you the relationship.  The best thing you can do if you pursue that option is to be business-like and responsible by doing everything within your power to maintain the repayment schedule you agree to.

 

Get a home equity loan – if you’ve owned the same home for quite some time, you might be able to borrow against the equity that has accrued.  There are two advantages to a home equity loan – 1) your credit is not a consideration and 2) this is a low-interest loan.  Just remember that your house is the collateral on this type of loan and if you default on this, you stand to lose your house. 

 

Join a credit union – this is a good idea when you’ve got bad credit because credit unions are classified as non-profit entities.  This means that their fees, interest rates, loan standards and membership are more relaxed than a bank’s.

Try a debt management program – this is a great place to get help when you’re trying to eliminate your credit card debt.  Credit scores are not an issue because this isn’t a loan. It’s a program that lowers your monthly payment amount, reduces your interest rate, and provides credit counselling which could help you in the long run. Reducing your debts and staying on budget can help repair your credit.