Are you determined to get your finances in check?

For many Australians, Debt Consolidation bad credit is one of the first options that borrowers look into. Debt Consolidation is seen as a great way to kickstart your financial management plan. Yes; you may have outstanding debts across multiple credit cards, and you may have bad credit, but this should not stop you from taking control of your financial situation.

Here are some tips to consider when learning how to manage your finances.

Is debt consolidation with bad credit right for you?

What ideas do you have about consolidating debts? Do you consider it as a way of getting away with debts or as a tool to help you manage your finances wisely?  If you think you can avoid debts and start new ones, then you got it all wrong. Debt consolidation does not erase debts. It simply rolls it into one manageable debt, with new terms and conditions, new monthly repayment schedule and new payment amount.

The truth is that debt consolidation takes discipline to work. A borrower wears many hats—that of a debtor and a finance manager. Take a self-employed borrower, for example. He may be spending more than $3000 a month for his various loans in the past, but now he has to pay only $2800 a month. Still, he is a debtor who has to pay his dues. The only difference is that he is now paying less and with only one lender. It may seem that he just makes a living and paying his obligations, but he’s also responsible for his budget so he can meet his daily needs, the costs of running his business and managing his debts. He is his own finance manager and he is still ultimately responsible for the results of debt consolidation. In the end, his credit standing depends on his financial decisions.

Managing debt consolidation bad credit loan

How much money do I need to repay my debts?

Without the right amount of financing, you can’t afford to repay multiple debts with varying interest rates. If you have a limited income; it may seem practically impossible to make repayments. It is therefore important to establish how much money you will need to pay any current obligations. So how does one do this? It’s quite simple.

  1. First, you need to determine the total amount of debts you owe. How much money will it take to cover your credit card debts, consumer loans, utility bills, mortgage loan and so on? Make a list of every debt you have for the last 12 months. Some will be ongoing costs, such as gas, electricity, water and rent payments. Others will be one-time installment loans, such as a short-term loan.
  2. After you’ve made a list, decide whether you can repay the debt without getting another loan. Is it possible or not? Are there loans such as money borrowed from a friend? Asses your current situation. Look at what subscriptions you are using. For example; do you really use Foxtel? Are you actually going to the gym? Cut out unnecessary expenses to help cover your repayments.
  3. Establish the type of loans that you have. Note your large loans. List your high-interest debts and check which ones are fixed or variable.  A fixed loan means that the interest won’t change in the foreseeable future. A variable loan, on the other hand, indicates that the interest will fluctuate over time.

How good is your personal credit?

Many people do not realise that loan approval is closely tied to personal credit rating. Without an excellent credit score, lenders will look for other ways to determine whether or not to let you borrow money. Requesting for your credit file from the major credit reporting companies such as Equifax is the first step to improving your credit and increasing your chances of being approved for a debt consolidation bad credit loan. Many borrowers are turned down for a loan simply because there is inaccurate information listed on their credit file. This can lower your credit score and decrease your chance of securing a loan.

Lenders look into your personal credit history to determine whether or not you are a responsible borrower. This means that they assess whether you have any missed payments, defaults or court judgments on your credit file. They will run a credit check, so it’s important to review your report even before you send your application. When you finally receive copies of your credit report, it is important to review them to make sure they are accurate. Look for credit report blunders that you can still correct. For example, if there are accounts which do not belong to you or reports of overdue debts that you have already settled, you can dispute them.

Simply send a dispute letter to the credit reporting companies and they will update it, the moment they found out that your claim is valid. However, there are errors that need time to be fixed. You need skills to fix this. You can attempt to repair your credit on your own, but the process is often long and confusing. Credit repair specialists can help you quickly resolve any negative issues.