It is a tough thing to be in a hole with seemingly no way to climb out, and many people looking for bad credit refinance help are overwhelmed and confused. There are many options available to assist persons with bad credit ratings, but buyers beware, because there are scores of scammers ready to take something for nothing. The question becomes, can I refinance with bad credit without selling my soul away?
It is a well-known fact that some debt management companies will take your money, not pay the creditors, and leave the debtor in the lurch with even worse credit histories. Instead of solving the problem, the customer is abandoned with a mountain of bills and the despairing hole gets deeper.
So, what is the person with a bad credit history to do? Sometimes, they have exhausted all scenarios such as bankruptcy, foreclosure, the dreaded wage garnishment, and never-ending harassment by obnoxious bill collectors. The consumer may have already been through a debt management company and even achieved some success but often, money problems continue to compound with interest and the person runs the hamster wheel for life. It really is a sad thing to see this.
Debt management companies began around 1951 because there was a sharp increase in consumer credit and default rates. The National Federation of Credit Counselors was established at that time and the purpose was truly to assist consumers avoid bankruptcy solve their fiscal issues. Credit card companies backed the agencies because they were able to collect some or all of the debt without strenuous collection effort or legal action. In many cases, the debt holder would make concessions by lowering the interest rate, waiving penalties, offering a final settlement along with other attractive options. Consolidation loans were given sometimes to restructure the debt.
In the 1970’s the credit counseling industry boomed with the extreme growth of credit card and consumer debt. From the 1970’s through the 1990’s bank loans, credit cards, mortgage notes and other consumer areas exploded. With that, debt management and consumer credit counseling services saw corresponding expansion. More debt consolidation loans were given out as a number of credit companies had very lax credit guidelines. Loans for any purpose was rather easy to obtain. As the economy worsened in the early part of the 21st century, consolidation loans all but disappeared.
That’s a good thing, though it may not sound like it. It does not make sense to get a loan to pay off a loan, even if the interest rate is better. Why not? Because getting a different loan does not address the fundamental root of the problem, which is bad spending and management habits. Most Americans are not taught sound financial management principles and wind up in a monetary crisis much of the time. Super athletes, actors, lottery winners and others go broke even after obtaining millions of dollars due to reckless behavior and poor management.
By the same logic, since the bad behavior is not addressed, the consumer may free up some disposable income, squander that, get another credit card and have even more bills hanging overhead in the proverbial black cloud.
Therefore, the consolidation loan worsens many people’s financial situations up even more. Instead of addressing their spend thrifty behavior, they are able to acquire another bad loan that can ruin them financially. In order to refinance with bad debt, the person in trouble needs to change, modify and totally revamp their lifestyle. More credit, debts, bills and obligations are not the solution. Counseling by a behavior expert may help.
There are many credible financial commentators. Some of my favorites are Clark Howard, Dave Ramsey, Suzy Orman and others. There is an enormous body of information written about personal financial matters. These professionals have websites and books that may help. It may be difficult to find the best information to apply to the individual situation. That is why I recommend psychological or behavioral counseling.
In my experience, money troubles are just symptoms of underlying issues. So the answer to your question, “Can I refinance with bad credit” is yes, but you may need to treat other issues, as well. Many debtors have addiction issues, alcoholism, depression, health problems and even mental illness. A trained professional can identify the symptoms and treat the condition. A banker cannot do that nor can a bill collector, finance company, credit card company, or customer service. Seek a licensed therapist. I have witnessed addicts get clean and then begin to pay attention to the financial situation. A trained professional will help sort out problems and guide the distressed person to solutions with other professionals.
Reach out to these professionals and read as much as possible about personal finance management. Be prepared to make lifestyle changes and keep a positive attitude. Have a sale to recoup some of the money spent in years past. Ask your boss for a raise (politely)! Ask your state and local agencies for assistance. Churches will sometimes help with utilities and other bills and there is no shame to seek for such favor. The real shame is to let your bad credit problems compound until everything is out of control and no creditor is willing to work with you. Some folks do have circumstances that arise that are out of their control, but in general, doing every little thing you can to improve your credit will pay off for you well in the long run.
