Posts Tagged ‘Payday Loans Debt Consolidation With Bad Credit History’

How To Use Payday Loans Debt Consolidation With Bad Credit History?

Many people wonder whether it is possible to qualify for a payday loans debt consolidation program even with bad credit. Well, it is very much possible. In fact, over 99% of those people who choose to consolidate payday debts have very poor credit score. When you are struggling with your debt problems and are making defaults on repayment, it obviously affects your credit score negatively.

It is almost impossible to protect your credit rating while you are not meeting your financial obligations properly. After all, 35% of your credit score depends mainly on whether you are making your bill and debt payments in time or not. Debt consolidation programs, therefore, often do not consider credit score as a qualifying criterion. These programs are meant for all those people who are unable to figure it out themselves that how they can get rid of their mounting debt problems.

Improving Your Credit Score Using Debt Consolidation

If you are considering signing up for a payday loans debt consolidation plan, you are advised to ask questions from the debt consolidation company about whether they will also help you improve your credit rating while allowing you to pay off your debts affordably. If you ignore this factor and participate in a consolidation plan for payday loans, it is very much likely to affect your credit score more adversely.

Debt consolidation and debt settlement are two different types of concepts, but many companies these days succeed in helping borrowers to settle a part of their debts by convincing the lenders to accept a lesser amount of money than the actual due and to still allow their clients (borrowers) to pay off the remaining outstanding balance in small monthly installments as part of a consolidation plan. Though these types of consolidation plans look very lucrative, as they allow you to clear your debt burdens more easily, but these plans also put a big negative mark on your credit report that is often as bad as having a bankruptcy record on credit report.

This way, if you do not ask your debt consolidator to protect your credit rating in advance, participating in a payday loans debt consolidation plan can make your bad credit situation much worse. The adverse effects stay for a long time and your financial future eventually can become very difficult because of this.

Can Debt Consolidators Really Help In Improving Your Credit Score?

Reputable companies who provide payday loans debt consolidation services keep this factor in mind. When they negotiate an affordable consolidated plan for you with your creditors, they also try to convince them not to report this negotiated settlement to the three major credit bureaus. When such settlements are not reported to credit bureaus, your credit reports remain unaffected. Though your credit rating won’t improve with this strategy, it won’t at least go worse.

Some reputable payday loans debt companies go a step ahead and they convince your lenders to even accept to do positive reporting to the credit bureaus about the consolidated settlements. For example, if your creditors allow you to settle your debts by paying less, but they report to the credit bureaus that you made the payments in full, it will give a significant

boost to your credit score. Such negotiations are difficult, but possible.

Overall, when it comes to using payday loans debt consolidation with bad credit history, the negotiation skills of the debt consolidators in question play a crucial role. Read the fine prints thoroughly before you participate in a program like this. Make sure that the provision regarding the protection and improvement of your credit score has also been described in the written contract.

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