Consolidating Student Loans With Bad Credit

Consolidating Student Loans With Bad Credit

8 min read


Consolidation Loan

A consolidation loan is a type of personal loan that consolidates several different types of loans into one payment. In most cases, a consolidation loan will have higher interest rates than any individual type of loan you could qualify for. If you’re looking at a consolidation loan, make sure to do some research first to find out whether the rate is worth paying off your existing loans. You may even want to check out refinancing, since that would lower the amount of money you owe.

Payday Loan

Payday loans are short-term loans designed to give people cash advances until their next paycheck. These financial products provide borrowers with emergency funds to cover unexpected expenses and address emergencies without having access to credit cards. However, these types of loans are high-interest loans that often trap borrowers in long term cycles of debt.

Small Business Administration (SBA) Loans

The SBA offers small business owners low-cost loans for everything from equipment purchases to marketing and expansion. If you own a small business and need financing to get started or expand, the SBA can help. To learn more about government grants and funding, talk to a local bank or community foundation.

Federal Housing Authority (FHA) Loans

The FHA provides mortgages for homebuyers who don’t necessarily fit traditional lending criteria. Applicants must be able to show a minimum credit score of 580 and a downpayment equal to less than 20 percent of home value. Unlike conventional loans, however, the FHA requires no proof of employment. Instead, applicants must submit documentation of monthly income and assets.

National Health Service Corps (NHSC)

If you’ve been laid off, received retirement or disability benefits, or taken early retirement, the NHSC may be able to offer you health services assistance. A service member can receive health care coverage through the NHSC while serving on active duty. After leaving active duty, they can use their NHSC benefits for up to 24 months following separation from the military.

Guaranteed Income Mortgage (GIM) Program

If you’re interested in purchasing a home but aren’t quite ready financially, the GIM program may be right for you. This federal housing subsidy provides eligible families with a direct grant to purchase homes priced between $35,000 and $190,000. Eligibility standards vary based on household size and composition. Once approved, you can apply online or at participating lenders nationwide.

Department of Agriculture (USDA) Rural Development Loan Programs

If you live in a rural area, the USDA offers a number of programs intended to benefit economically distressed communities. Through the Farmers Home Administration (FmHA), farmers with low incomes can obtain low-interest loans backed by the full faith and credit of the US Government. The Rural Electrification Program helps low-income consumers connect to electricity. Additionally, the Section 811 Program gives landlords monetary subsidies if they rent to qualifying low-income tenants.

Consolidating Student Loans With Bad Credit

Consolidate student loans with bad credit

Bad credit doesn’t mean your future is over. If you have outstanding debts, don’t let them stop you from getting ahead. There’s no need to pay back debt if you’re not sure how you’ll be able to afford payments. To get out of debt, try consolidating your loans. You may qualify for a lower interest rate, flexible repayment terms, and even free money.

Consolidate student loans at a bank

If you’re looking for options where you won’t feel pressured to make immediate payment, consider consolidating your loans at a bank. By doing so, you can take advantage of special rates and flexible repayment plans offered by banks. Your lender can help you decide what type of loan best suites your situation.

Consolidate student loans online

One way to consolidate your loans is by going straight to the company who gave you the money in the first place. Many lenders offer consolidation programs, so you might be able to cut down on the amount of time you spend in collections. When you consolidate your student loans, you could save thousands of dollars in interest payments each year.

Consolidate student loans without closing accounts

Many student borrowers find themselves buried under mountains of debt. You may feel like you’ve got nowhere else left to turn. However, you don’t necessarily have to close any old accounts to consolidate your student loans. While you still owe money to some creditors, you can use the cash from your consolidated loans to start paying off smaller debt faster.

Consolidate student loans using a prepaid debit card

A prepaid debit card is one of the easiest ways to get started on your path toward financial freedom. Prepaid cards allow you to save money upfront and only pay back what you’re able to afford. A debit card lets you transfer funds between different checking account types (like direct deposit) or withdraw directly from an ATM.

Consolidate student loans by taking on extra work

Instead of being afraid of asking friends and family to lend you money, you can look for opportunities to earn extra income. Consider working in retail, babysitting, dog walking, tutoring, or any job that provides consistent hours. Even though you won’t be making much money, these side hustles can put you closer to having paid off your student loan debt.

Consolidate student loans through a federal program

If you’re enrolled in a public school, you may qualify for a Federal Direct Consolidation Loan. Through this program, you could receive a combined total of up to $20,500 in additional funding for your education. In addition to providing additional aid, this program allows you to avoid private loan fees.

Consolidating Student Loans With Bad Credit


Consolidating student loans with bad credit means merging multiple loans into one loan with a single payment. If you have poor credit or no credit at all, consolidating could help you pay off your debt faster and lower your interest rates.

Favorable Repayment Programs

If you consolidate your student loans with bad credit, some lenders may offer a favorable repayment program that lowers your payments and reduces the amount owed over time. You’ll still have to make regular payments, but they’ll be much less than what you owe now. Most borrowers don’t realize how much their monthly payments are, and how long it would take to pay off their total outstanding balance if they didn’t consolidate. That’s why you should always consult with a qualified consumer lending professional before you decide whether or not to consolidate.

Lower Interest Rates

When you first apply for student loans, your interest rate is low (often about 4% or 5%). But as time goes on and your credit score stays low, your interest rate increases. When you consolidate your student loans, the lender will use your current, higher-interest rate to calculate your new, consolidated interest rate. In many cases, your new interest rate will be significantly lower than your old rate.

A More Efficient Payout Plan

A consolidation plan might require monthly payments equal to your original loan total. However, since your interest rate is lower, your monthly payment is likely to be smaller, even though the total amount borrowed remains the same. Your monthly payment will be a fraction of your original loan total, meaning you get paid out sooner, saving money and giving you cash to spend on something else.

No Collection Fees

In addition to lowering your interest rate, consolidating can eliminate fees associated with collection calls, lawsuits, and late payments. If you find yourself struggling with high payments, contact your lender immediately. Lenders have different policies regarding collection fees, depending on their own terms.

Consolidating Student Loans With Bad Credit


A consolidation loan is exactly what it sounds like – the combination of several different loans into one larger loan to help pay down the total amount borrowed over time. A consolidation loan helps borrowers improve their credit rating while paying off debt faster.

Types of Loans

There are many types of student loans, including federal direct subsidized and unsubsidized loans, private alternative loans, and private guaranteed loans. There are also many options when it comes to the type of repayment plan. A borrower may choose to repay loans with monthly payments, bi-weekly payments, or even make a payment at once each year.

Why Should I Consider Consolidation?

If a borrower makes all of his or her payments on time, they will find that he or she can save money by consolidating loans. It’s possible to consolidate loans with bad credit and still have a good outcome. If a borrower does not have enough income to cover all of his or her debts, then consolidation can help to lower the interest rate and reduce the total amount owed. Interest rates on student loans vary from lender to lender, and some lenders offer attractive deals if the borrower chooses to consolidate. Borrowers should visit our website to learn more about how consolidation works.

How Do You Choose Which Loan To Consolidate?

When choosing between loans to consolidate, consider the following factors: the amount of debt you need to pay off; the number of loans being consolidated; the length of time you plan to use the loan; and any fees associated with the consolidation. Before deciding whether to consolidate, it’s a good idea to consult with a financial professional who can help you decide which option produces the best results.

Consolidating Student Loans With Bad Credit

Consolidate Your Student Loans if You Have Bad Credit

If you have bad credit, then consolidating your student loans may not be possible. However, many people who do not qualify for traditional loan consolidation options still have good options available to them. If you want to consolidate student loans with bad credit, consider doing it yourself using your own funds. You may also find that certain online lenders are willing to work with you even though they don’t accept the major credit bureaus.

Consider Alternative Funding Methods

Even if you have bad credit, some alternative funding methods may still be available to you. These options include federal grants, low income tax credits, and government-backed repayment programs. Another option is to borrow money from family members. There are ways to go about this without putting your family at risk. Check out our post on “How Debt Can Affect Family Relationships” for tips on how you can get help from loved ones while making sure your parents are protected from financial ruin.

Take Advantage of Public Service Programs

Public service programs are designed to offer debt relief to borrowers who need it most. Some of these programs include Sallie Mae’s Public Service Loan Forgiveness Program (PSLF) and the Department of Education’s Pay As You Earn program (PAYE). Both of these programs allow eligible borrowers to cancel their remaining balance after 10 years of making payments. Even if you don’t qualify for either of these programs, you might still be able to benefit from these public service loan forgiveness programs.

Use Federal Tax Refunds

Federal tax refunds can supplement your income and help pay down your loans faster. Many people are surprised to learn that they can actually use their federal tax refund to reduce their loan balances. If you plan ahead and budget wisely, you can make the most of your tax return to save money instead of spending it. Learn more about how to maximize your tax refund here.

Get Help From a Financial Advisor

A financial advisor can often provide valuable insight into your situation. He or she can help determine if you qualify for any public service programs and identify the best way to put your finances back in order. A knowledgeable advisor can also recommend different strategies that can help improve your situation.

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