In these days of a worsening economy and increasing job layoffs, sliding down the slippery slope to bad credit is no longer only associated with careless, undisciplined spenders.  Careful, conscientious people are caught in situations they never choose which have led them to bad credit. We don’t have to look far to see the casualties of bad credit and those who are labelled as such, often feel mentally paralysed.

The Theft of Your Options

Perhaps the most confining aspect of bad credit is its stifling ability to rob one of life’s most precious commodities: options.  Why are options so critical?  Because without them, you are driven by the whims of others:  others’ schedules, programmes, interest rates, jobs, cars and on and on it goes.

Veggie Burger or Juicy Steak

An option can, for example, give you the choice between a healthy veggie burger and a scrumptious, juicy, thick steak.  For the health conscious, the choice may be easy.  For the carnivore reading my words, walking away from the scrumptious steak is tantamount to a mortal sin.  But the option to choose gives you power; power to rule over what you want and need in daily life.

Pull Up!

The downward spiral of bad credit does remove many options and although life’s emergencies or less than optimal financial choices may have slapped the “bad credit” label on you, although costly, it doesn’t mean financial death.  Quite the opposite – the vast majority of us have families and responsibilities to take care of and have no wish to fail in doing so.  It’s time to rise above the muck and wake up to your options, one of which may be a bad credit short term loan.

Experts Praise Options

The discipline of assessing your financial position is crucial to recovery with bad credit.  Experts recommend honest, careful listing of all your debts, large and small.  The step of making a budget cannot be overlooked as you list your income and how you spend your monies each month, both of which give you a realistic picture of next steps you can take in your plan to move ahead.

Now fast forward five years – every decision you make today will either put you in a better or worse financial situation then.  The option of leveraging cash today with what is sometimes called a bad credit payday loan may give you some breathing room financially for a short term in order to move forward tomorrow.

Freedom of Choice

Back to the veggie burger and steak illustration, which would YOU choose?  Say you were assigned one while your neighbour in the table next to you got his or her choice – feeling a bit cheated?

The truth is that, with your finances, you absolutely must be in control of your choices.  These choices include discipline, hard work, seeking out counsel if needed.  You may need the option of immediate cash to give you financial options in the near future.  Your bad credit doesn’t need to keep you from a short term loan.  You can use these monies for any purpose you desire, they are generally given with instant approval and with payday right around the corner, you can pay them right away.

Always read carefully the terms of any loan and experts caution against using short term bad credit payday loans to continue bad spending habits.

Gift of Time

The ability to pause and examine your options and best next financial steps require time to think; time to assess what your challenges are and how you will face them head on.  Now your less than perfect credit doesn’t call the shots, you do.  Your choice of tools in gaining more time may be best served with a short term loan before your next payday.  Here’s to your options!

Freelance writer Sarah Fox sees options as key to freedom in all of life.  She notes that bad credit payday loans are gaining increasing attention as option-based planning gains popularity.

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If you have a lot of debt, especially unsecured credit card debt, it may seem like a good idea to consolidate all of those little loans into one big loan – and indeed, doing so can save you time and money. Be careful, though, because different debt consolidation plans can either help or hurt your credit. Choose a plan that will get you out of debt as quickly and easily as possible while protecting your credit profile as much as possible:

Consolidating debt with a debt consolidation loan

Debt consolidation loans are the most popular way to consolidate and pay off debt. Rolling all of your loans into one larger, consolidated loan (preferably with better terms and interest rate) can actually save you money by reducing what you pay toward those debts.

Be careful, though, because it’s not always easy to find a debt consolidation loan with good terms, especially if your credit history has taken a hit because of recent financial difficulties, and/or because you’re carrying a lot of financial debt.

There are options if you have difficulty getting these loans through traditional lenders, such as peer-to-peer lenders like Prosper.com and LendingClub.com. You can also check with your credit union or bank, or search for an online lender that offers consolidation loans at reasonable terms. Make sure you do your homework before you sign up, though; there are lots of scammers out there, so make sure you double and triple check the organization’s reputation before you take the plunge.

How does this affect your credit?

Using a debt consolidation loan to combine and then pay off your debt can actually help your credit, since taking one out may let you pay off credit cards that are near their credit limits. Used wisely, this is a great way to manage your debt and maintain or even improve your credit rating.

Consolidating debt with a formal debt management plan

The so-called “debt management plan” or DMP is offered through credit counseling agencies; with this type of plan, you sign up as a client with the credit counseling agency, make one payment to that agency, and then the agency makes payments to each of your creditors, usually in exchange for reduced interest and lower payments. Again, make sure the agency you are dealing with is reputable.

How does this affect your credit?

Unfortunately, your credit will take a hit because you must close all of your credit accounts while you’re working with one of these programs. But it’s also true that FICO doesn’t care that your debt is getting paid off with the help of the counseling program, just that it is. What that means is that yes, your credit will probably take a short-term hit simply because you have to close all of your accounts while you’re with the programs; the effect is relatively short-term and will ultimately improve your credit if doing so lets you pay off your debt, though.

Consolidating debt by transferring to a lower rate credit card

You can consolidate credit card debt by transferring it from higher interest credit cards to a lower interest rate credit card; this can indeed help you pay off your debt sooner because your interest rate and monthly payment will be lower. However, be careful to be very disciplined. Don’t simply transfer the debt to the lower interest card, only to have interest rates jump after the introductory period so that you’re back in the same bind as you were before the transfer. Pay off the debt before the interest rates jump.

How does this affect your credit?

In general, your credit scores will drop when you open up a new credit card account and use the available balance on a credit card to consolidate debt. However, it’s a relatively short-term drop and probably worth it if you’re disciplined enough to pay off that debt before your interest rate takes a jump. It’s worth it to take a small hit if doing the transfer means that you can pay your debt off and save money at the same time. In the long run, you’ll actually improve your credit scores over time if you do so.

The author who contributed this article is Chase Sagum, Financial and Business blogger. Check out more of his content at www.lexingtonlaw.com.

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