So, you’re struggling with debt – and your credit score has taken a hit. It’s a tough situation, but don’t lose hope. There ARE solutions out there, even if your credit is less than stellar.First off, let’s talk about what counts as a “bad” credit score. Generally, anything below 580 is considered poor credit by the major credit bureaus. If you’re in this range, you might feel like your options are limited – but that’s not necessarily the case.One potential solution is a debt consolidation loan. This type of loan allows you to roll multiple debts into one monthly payment, often with a lower interest rate. The catch? It can be tough to qualify for a consolidation loan with bad credit.But don’t give up just yet! There are lenders out there who specialize in working with borrowers who have poor credit. You might have to pay a higher interest rate, but it could still be worth it if it means getting your debt under control. Some options to consider:
- Avant: Offers personal loans up to $35,000 with credit scores as low as 580.
- OneMain Financial: Provides personal loans up to $20,000 for borrowers with credit scores in the 600s.
- Upgrade: Lends up to $50,000 to borrowers with scores as low as 560.
Another option to consider is a secured credit card. With this type of card, you put down a cash deposit that serves as your credit limit. It’s a way to build credit while still having access to a line of credit for emergencies or unexpected expenses. Just be sure to make your payments on time, as late payments will still hurt your credit score.If you’re really struggling to keep up with your debt payments, you might want to consider credit counseling. A reputable credit counseling agency can work with you to create a debt management plan and may be able to negotiate lower interest rates or payments with your creditors. Some good resources:
In some cases, bankruptcy might be the best solution. It’s a big step, but it can provide a fresh start if your debt has become unmanageable. There are two main types of personal bankruptcy:
-- Chapter 7: This type of bankruptcy allows you to discharge most unsecured debts, like credit card balances and medical bills. However, you may have to give up certain assets, like a second car or vacation home.
- Chapter 13: With this type of bankruptcy, you create a repayment plan to pay off your debts over a period of three to five years. You may be able to keep more of your assets this way.
Bankruptcy will have a major negative impact on your credit score – but if you’re already in the “poor” range, it may not make a huge difference. And once your debts are discharged, you can start rebuilding your credit right away.The bottom line? Don’t despair if you’re struggling with debt and have bad credit. There ARE solutions out there – you just have to be willing to do some research and explore your options. And remember, you don’t have to go through this alone. Don’t be afraid to reach out for help, whether it’s from a credit counselor, a financial advisor, or a trusted friend or family member.At Delancey Street, we understand the challenges of dealing with debt – especially when your credit score is holding you back. That’s why we offer personalized debt relief solutions tailored to YOUR unique situation. We’ll work with you one-on-one to find the best path forward, whether that’s consolidation, settlement, or another option.