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Where Do I Get Bad Credit Loans to Consolidate My Bills?

Couple and baby apply to get a loan

Updated: Oct 20, 2014

Highlights

  • Review different consolidation options.
  • A home equity loan will offer the lowest monthly cost, but the highest overall cost.
  • Work to improve your credit, if your bad credit is limiting your options.
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Where Do I Get Bad Credit Loans to Consolidate My Bills?

If your credit rating has taken a beating, you may be struggling to pay the bills. Low credit scores are often accompanied by abruptly boosted interest rates, which lead to higher expenses. Debt consolidation is a great way to get a handle on your bills, even if you have bad credit. Are you wondering, “Where do I get bad credit loans to consolidate my bills?” Keep reading to find the answer.

Consolidate Credit Cards with Bad Credit

If you have a lot of debt on high interest credit cards, you have three choices to consolidate your bills: a credit card balance transfer; a home equity line of credit or home equity loan or home refinance; or a personal loan. A balance transfer will get you the lowest rate, but only temporarily. A personal loan could have a rate that is lower than your current credit card interest rates that is repaid over  a longer term, but it may still be very high if you have a very low credit score. Contact your bank to ask about a personal loan. You may also receive offers in the mail. Carefully research the lender before agreeing to any offer you receive in the mail.

If you own a home, a home refinance or home equity loan is your best option. Because the loan is secured by your home, the interest rate is lower than you would find with a credit card or personal loan. The rate won’t be the lowest possible, however, because those are reserved for borrowers with excellent credit. You may also find that the rate is lower if you have more equity in your home because it gives the bank a bigger financial cushion if you default.

Tax deductions are another advantage to home equity loans. Mortgage interest and most interest for home equity loans or lines of credit is tax deductible, which will free up a little extra cash for paying those bills.

Consolidate Student Loans with Bad Credit

If you need to consolidate federal student loans, you’re in luck. The interest rates and consolidation rates are regulated by the federal government. You will almost certainly qualify for a reasonable interest rate from any student loan consolidator. Start with your current lender, but contact a few others to see if their terms and discounts vary. Consolidating is more complicated with private loans, but it may still be possible. Contact your current lender for information, then search for lenders online. Ask a few for quotes before accepting an offer.

When it comes to student loans, you should avoid combining them with other debts or paying them off with a home equity loan or cash-out refinance. This is because most federal student loans are forgiven at death or permanent disability and can be deferred while you’re alive. You lose these benefits if you swap them for a different kind of debt.

If you have bad credit, consolidating your debt and bills is a great way to improve your credit history. By paying down debt, you also improve your financial future and your ability to qualify for credit at better rates. No matter what your credit is like, you’ll be able to find someone who is willing to take a risk on you.

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  • MF
    Jul, 2013
    Matthew
    My wife and I had to consolidate old medical bills from a few years ago because, even though we both had insurance, they didn't cover almost $30k in medical expenses from surgery (our 3 year-old daughter was attacked by a dog and had to have surgery, some cosmetic, which was not covered). We put that debt onto our credit cards and have never missed a payment on any of our debt. We both make (together) over $110k per year but with these credit cards, student loans, auto loans, etc. our debt-to-income is still way too high. All we want to do is take ALL our debt, put it into a single loan and pay on it until its gone because having this debt spread out makes the $1,500k+ / month we pay out practically meaningless as far as paying down the debt goes. If we could pay one loan amount between $1,000-$1,300 /mo even on just our credit card debt, that would bring our credit scores up back to above 700's where they were. We rent, so have no home equity and every online "debt consolidation loan" application gets denied for having too much debt. Isn't that why we need the consolidation? Does anyone know of maybe a private lender, even if the interest is high, that does debt consolidation like this for working adults who care about their credit? -Matthew & Carrie
    0 Votes

    • BA
      Jul, 2013
      Bill
      I understand your frustration. You want to repay your debts in their entirety and maintain a high credit score. Please don't interpret what I am about to say as callous or unsympathetic, but the lenders' reactions are understandable: They see you as a person with a high DTI, and you seek more debt. From their perspective, there is no legal way I know of to hold you to your promise that you will use the loan to consolidate the other debts. If you bank with a local credit union or bank and know the staff there personally, they may take you at your word you'll use the loan to pay off your other loans, and give you a signature loan.

      Time to think outside the box. Take a few minutes to use the Bills.com Debt Coach tool to look at all of your options to resolve the debt. You may need to sacrifice your credit score temporarily to achieve debt freedom.
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  • TM
    Apr, 2013
    tranika
    I Just want to start my life over how can i get a loan to pay off all my bill and have one monthly note i just want everyone i owe to be paid off and i pay a lender once a month and can pay that off in a hurry is there such a lender out there
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    • BA
      Apr, 2013
      Bill
      Tranika, unfortunately, you have limited options for consolidating loans when you have bad credit, and even fewer if you don't own property that you can use as security on the loan. You could check with a bank or with a peer-to-peer lender, but bad credit will result in a turn-down or a very high interest rate.

      It is not clear from your question exactly what kind of debts you owe, but I suggest you speak with both a credit counseling program and a debt settlement program. Neither option is a loan, but both have one monthly payment and may be able to help you get out of debt faster and at a lower cost. Please read the information in the two links above to get a better understanding of how each approach works and their pros and cons.
      0 Votes

  • CL
    Aug, 2012
    Casey
    I have federal and private student loans. I was already able to consolidate most of my federal loans and I currently have no problem with them. My biggest issue is with my private loans - originally through Citibank but have been sold to Discover Student Loans. I have tried every bank and organization I can find and cannot get approved for a consolidation loan even with a cosigner. My credit score continues to fall because I don't make enough money to pay for these loans and both Citibank and Discover have refused to help lower my payments. I've been told it's an "industry standard policy." But as Fedloan Servicing is willing to help, I don't think that's true. Are there any suggestions you can make to help me resolve this? I'm trying to make this bill more manageable so that I can build my credit score and may be able to consolidate in a few years.
    0 Votes

    • BA
      Aug, 2012
      Bill
      Unfortunately, Citi and Discover are within their rights to be inflexible, whether it is an industry standard policy or not.

      A co-signer with strong credit and healthy DTI should've been sufficient for you to qualify for a consolidation loan. I am surprised that you've had no luck with a co-signer. Did you receive a specific reason why you were turned down? Was the issue with you or your co-signer?

      There are not a lot of options, when it comes to private student loans. You can continue to try to work out a payment plan or see if you can negotiate a lump-sum settlement, if you have a friend or family member that could help you raise the money.
      0 Votes

  • SV
    May, 2012
    sandra
    Hi, I have a total of $11,000 on debts. most of my CC are from retail and two of them from finance companies/ I have a stable job, I make $26,000 a year. My husband & I just bought a house and now that we have that $2,700 mortgage plus bills to pay I am struggling to cover the bills. I am thinking of getting a loan to try pay my CC but I am not sure if this is going to affect my score credit and "most important" the tax return for next year. I don't want to get a loan, pay my debts and then when the tax return comes... I don't want to know I am going to get less money. Can you please advise the best way for me to do it. Thanks so much
    0 Votes

    • BA
      May, 2012
      Bill
      Sandra, the way that you choose to handle your debt will not affect your taxes.

      You can seek to consolidate your debt through a loan, but if you are struggling to pay your bills, your debt-to-income ratio (DTI) might prevent you from qualifying for a loan. Check with your bank and a local credit union, to see if you qualify for a consolidation loan that has a lower interest rate than your credit cards.

      If you can't get a loan, look into a credit counseling program, which may be able to get you reduced interest rates and help you get out of debt faster.
      0 Votes

  • CD
    Jul, 2011
    Chris
    I have about $10,000 in debt and bad credit- I owe a bank about $1,500 that was sent to collections, deb collectors for Verizon, Sprint, medical bills, college tuition... I only make about $1,000 a month and am currently paying on only one medical bill. I am scared to death because of garnishment. If I get garnished I won't even be able to pay my rent. I am scared! I own nothing that could be put down on a loan. What do I do?
    0 Votes

    • BA
      Aug, 2011
      Bill
      You can try to work out monthly payments with your creditors, after disclosing your income and fixed expenses. You could also try to negotiate settlements with your creditors, although you likely need to have funds ready to pay a settlement to make the process succeed. Lastly, you can consult with a bankruptcy, which could wipe out your debts and also protect you from any wage garnishment. If you consult with a bankruptcy attorney and find that you qualify for a Chapter 7 bankruptcy, you don't have to file for it, but will have the peace of mind of knowing that it's an option if you are sued and can't work out solutions with your creditors.
      0 Votes