Getting a good deal for debt consolidation depends on how perfect your credit score is. Though it will not directly affect loan approval or time for its procedural work, still you are less likely to get a good interest rate on the amount of borrowing.

A bad credit rating indicates that you are not an ideal person to manage your finances properly. One of the reasons that you have a low credit score is your delinquency in payment of bills and loans. According to FICO credit score assessment procedure, payment default negatively affects more than 35% of your credit history. It warns the lenders that you are a high risk borrower. When you have defaulted on payment before, you can do it in future too, at least they think that way.

When these lenders provide you with a loan, they charge high interest rate in order to safeguard their investment from the risk. Being at the receiving end, you bear a heavy load of repayment. Sometimes being left with no other alternative choices, people like you agree to go with debt consolidation. Those who can manage to payout for a long term can only adjust to such an expensive choice.

What kind of loan you can obtain with a bad credit?

Secured loan is the first in the list that you can avail with a poor credit standing. If you own an asset – especially a real estate property – the value of which is equal to or more than the amount you will borrow, it can be placed as collateral. It will serve as a security for the lenders. They can sell it off if you default on the schedule payment either willingly or due to financial hardship. Majority of the homeowners use their house in order to obtain a debt consolidation loan. Placing of collaterals also scalps off the higher interest even if you are a poor credit record owner.

Options are also there for those having nothing to present as collateral. They should consult the officers in the local banks or credit unions. The chance of getting low-rate loans is greater if you approach the local financial institutions or those with which you have a record of transaction.

Payday loan is another smart choice for getting instant cash in times of dire financial need. It is provided as an advance on your salary and puts you under obligation of paying off on your next payday. Taking it out is an ideal strategy for your survival till next payday and when you are almost without penny in pocket. The catch is the loan requires repayment within a very short time period.

The debt consolidation lenders are a different group that specializes in providing only the consolidation loan. Some of them offer loans only for those belonging to the bad credit bracket. Here too, the possibility of getting low interest depends on your credit status.

Peer-to-Peer lending companies are also a good source of procuring a debt consolidation loan from. A third party comes into the play and guarantees that no hitch will ever arise out of transaction. Time has changed and these days, you don’t have to worry much about getting a debt consolidation loan just because you have a bad credit history.