Bill Consolidation Options If You Have Less-Than-Perfect Credit

Print this page

Do you think your credit is bad?

If your credit history has some blemishes on it, you’re not alone. But, it doesn’t necessarily mean it’s “bad” or that you’re out of choices when it comes to your finances. In fact, you probably still have options.

Less-than-perfect credit encompasses a fairly wide range of credit scores. And some sound companies, like Wells Fargo Financial, specialize in lending opportunities for customers with less-than-perfect credit. Those opportunities include bill consolidation options.

Before exploring consolidation choices available for less-than-perfect credit scores, let’s first look at a few credit basics.

Credit Trends

Your credit report is typically requested when you apply for a loan. The reasons for obtaining credit vary widely and include making large purchases, such as a home or vehicle, wanting to restructure outstanding debt, applying for a credit card or just needing a smaller personal loan.

In November 2007, revolving debt (e.g. credit card) rose more than $8 billion and non-revolving debt (e.g. auto loan) rose nearly $7 billion. That means consumer borrowing in the United States, not including borrowing secured by real estate, rose by $15.4 billion in one month bringing consumer credit to a total $2.51 trillion.¹

Let’s face it. Using credit has become an everyday occurrence in our culture.

What Happens When You Use Credit?

When you apply for credit, the lender needs to assess its risk. This assessment helps determine whether to extend credit and the likelihood of being repaid on time.

Lenders obtain your credit report from credit reporting agencies. To aid in their credit risk assessment, your credit report contains a history of your credit behavior as it has been reported to the agencies by lenders who have extended credit to you.

While lenders are not required to provide information to the credit reporting agencies, many do. If a lender elects to report, it will provide specific information such as payment history, unpaid balance and available credit.

In addition to your credit report, the lender can also obtain your credit score; a numerical value, calculated through a complex formula, that helps creditors assess your credit worthiness.

Classifying Credit

One widely-used credit score is called a FICO® score, a numerical value ranging from 300 to 850. Credit reporting agencies calculate this score with a mathematical equation that evaluates information on your credit report.

Lenders have different standards and underwriting guidelines that determine the types of loans they offer and at what interest rates. Generally the higher your credit score, the more likely you are to obtain the amount of credit you desire at favorable interest rates.

Perfect, near-perfect or less-than-perfect credit scores are determined mathematically through the reported credit data...good and bad.

Any negative (“bad”) information, such as late or missed payments, can lower your credit score.

Can I Consolidate My Debt If I Have "Bad" Credit?

For example, borrowers often consolidate their debt into one loan, commonly called bill consolidation or debt consolidation, as a way to get back on track. This strategy simply means combining more than one outstanding credit account into a single new one.

Not only does this make managing your monthly bills easier, it could also mean a lower overall monthly payment with the new loan which could add cushion to your bank account...now or in the long-term.

Wells Fargo Financial offers many credit options, including bill consolidation loans, to customers with less-than-perfect credit.

How Can I Consolidate My Debt?

There are different ways to consolidate debt.

If you own your own home, you may consider using a home equity loan to consolidate your debt. If you’re not a homeowner, but have a vehicle, you may be able to use it for bill consolidation.

Wells Fargo Financial offers a variety of debt consolidation options, including:

• Mortgage Refinancing
• Home Equity Loans
• Home Equity Lines of Credit
• Auto Refinancing

Debt Consolidation Strategies

If bill consolidation seems like a suitable financial strategy for you, consider these simple steps as a starting point.

1. Learn about product options.

   Since there is more than one consolidation method, it may pay to learn the common product basics. Although there are multiple ways to consolidate debt, not every option works for every person.

2. Check your credit report.

   Find out where you stand with your credit before contacting lenders about your options. This is true not only when you consolidate debt, but any time you consider obtaining credit for larger expenses (e.g. house or vehicle purchase).

3. Find a reputable lender.

   Many lenders offer ways to consolidate bills. However, not all lenders are right for all borrowers. It is important to find reliable lenders that specialize in credit options specific to your situation.

Getting Started

To consolidate your bills, contact us online or call toll-free 1-800-945-8934 today for your personal debt consolidation assessment.

Table 1: Five Tips to Help Cut Down on Debt

Five Tips To Help Cut Down On Debt
1. Develop a budget.	One of the simplest, yet commonly overlooked debt management tools. Seeing how much money you bring in each month and where it goes can be an eye-opener. Find ways to cut expenses, develop a realistic budget you can live with, and stick to it.
2. Sell assets to help pay down your debt.	If you search your home or garage, you may find items you never use. Or, maybe you have containers of gently-used items in good condition. Perhaps you have a vehicle that doesn't get driven anymore or a vacation home you rarely see. Selling your property, big or small, can make resources available for paying down your debt.
3. Consistently pay more than the minimum monthly payment on your credit cards.	If you can make this work, it can make a difference. Paying more than the minimum could cut months, even years, off the time it takes to wipe out the debt.
4. Restructure your mortgage payments.	Paying your mortgage payments bi-weekly could significantly lower the total amount of interest paid over the life of the loan. Plus, it could reduce the amount of time it takes to pay off your mortgage.
5. Use your tax refund to pay down credit cards or other debt.	If you’re lucky enough to get money back from your income taxes, use it to pay off bills. That can quickly lower your overall debt.