Question:

What is debt consolidation and does it work for people with bad credit?

Answer:

If you have bad credit and a lot of debt, you probably know what debt consolidation is.

Debt consolidation comes out as a possibility when you have many different payments and literally all your income gets eaten in covering multiple obligations. People with bad credit typically suffer even more, as their obligations carry higher rates.

Debt consolidation is an attempt to combine monthly payments in one, reduce rates, and manage your finances better. While it is true that debt consolidation may be successful in reducing your debt, it is not something you couldn't do on your own, and not always enrolling in a debt consolidation program will get you constantly out of indebtedness.

However, debt consolidation is possible if your credit is particularly bad. If you have a house, you may be able to get better rates with a secured loan - refinancing or taking a second mortgage are commonly used for a debt consolidation program. If you have real bad credit and do not have a house to use as collateral, the unsecured debt consolidation loan may carry discouragingly high rates.

However, what debt consolidation is allows even for people with bad credit to get a loan or a credit card to use for debt consolidation purposes. You only have to shop around for a better offer.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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