Maybe this sounds like a familiar scenario — you’re in financial trouble and your credit is shot, so you take out a bad credit loan to pay your bills and start rebuilding credit. Only you can’t pay your bad credit loan on time, so you take out another loan to pay the first one. Then another loan to pay the second. Then another loan, then another loan, then another…
Many folks who get into financial trouble just keep borrowing and borrowing — until they can’t borrow anymore. It’s like the revolving door of credit. It just keeps going around and around, leaving you stuck in the middle and not any better off financially.
How do these situations happen?
A big way people wrack up debt is through credit cards. It’s easy when you’re in financial trouble to make payments with your cards and pay off only the minimum balance, but that’s a short-term solution. With credit cards, you can keep paying the minimum for years without making a dent in the overall balance.
Some take out instant payday loans, which have high-interest rates and short repayment schedules. Many who take out a payday loan either aren’t able to repay or find it such a good deal at first that they get talked into taking out another. But the reason payday loans can seem too good to be true is because they are. Payday loans can fuel the revolving door of debt with hidden fees and increased interest rates.
Personal loans can be a better option for paying off debt — it clears all the debt and provides a single monthly payment, which can work. But if you’ve had financial trouble before, you won’t always qualify for a loan if you’re deemed a high risk for credit.
Sometimes to have the most sustainable debt management you need to deal with the existing compounded debt before you can rebuild.
More credit isn’t always the best answer. Luckily, there are many alternative financial solutions that can help people loaded with debt. Some solutions provide a single monthly payment, stop interest, and reduce debt. Then once the debt is dealt with, you can begin to rebuild your credit.
The best thing is work with a lender who cares about you — not just about jamming their financial products down your throat. You want to work with someone who actually wants to help you understand your finances, wants to use a bad credit loan to help you rebuild your credit, and make meaningful improvements.
At Prudent Financial Services, we pride ourselves on providing service with care. We want to help you find sustainable debt management and live the life you want.
Contact us today for a free consultation: 416-223-9300 or www.prudentfinancial.net.