Consolidation loans with bad credit may seem impossible or unwise, but it is definitely something to consider when in serious debt.
When you get a consolidation loan you use that money to pay off multiple large debts. You then have one monthly payment on the loan, making your monthly payments less overwhelming. The goal is to find a deal with a lower interest rate than what you are paying overall.
When you have bad credit your rates will be less favorable than they could be otherwise, but you still may find something better than you are currently paying.
You have two main options to consider before starting your search, secured and unsecured loans.
When you have a secured option you put your property up as collateral. If you fail to make payments you will lose the collateral. The lender will sell it to make up the money you did not pay them. Because the lender is taking a smaller risk you will have more options and a lower interest rate. The collateral could be in the form of a house. In this case you are taking out a second mortgage. Most banks will work with this option and you'll want to talk to the bank you currently use to see what they'll offer you. You could also use a vehicle, jewelry, or other collectible of value as collateral.
For consolidation loans with bad credit a secured loan is a highly desirable option to improve your rates and the number of lenders who will work with you.
Unsecured loans are usually based on your credit history. There are lenders who will work with your regardless, but they can be harder to find, and depending on the type of debt you have, could have higher rates than what you are currently paying. If this is your only option it does not hurt to check out some lenders and find out what rates you would be offered.
Once you have funding, if you keep up with the payments, you will hopefully improve your credit by building a solid history of payments and becoming debt free.
Before signing anything make sure to read everything and make sure you are clear on the terms. Look for other fees and be sure they seem reasonable to you. It is also advisable before signing anything to become very informed about all your options, and possibly seek a credit counselor for financial advice.
Under the right circumstances consolidation loans with bad credit can help you become debt free and improve your credit history.