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Tuesday, May 25, 2010

Is it Wise to Obtain Bad Credit Debt Consolidation Loans When You Are Unemployed?

Nowadays, in United States, the unemployment rate is still on the rise but the economic growth is too slow. For people who are currently unemployed and they are having poor credit rating, is it the right time for them to rebuild their credit by applying for bad credit debt consolidation loan?

The answer is No. In my personal point of view, before you obtain this type of loan, you should first assess your financial situation carefully. Since you don't have a full time job, you need to ask yourself honestly whether you have any side income to pay your new loan monthly. Even if you have a part time job, is the income sufficient to cover your monthly necessities and monthly commitment? There are in fact certain financial risks involved when you are applying such loan during the unemployment.

A very typical poor credit debt consolidation loan is home equity loan. In general, it is quite easy to obtain bad credit loan if you own a property. You won't face much difficulty during your application. However, you are reminded to think twice. It is indeed important for you to realize that the loan ultimately will need to be repaid soon. When your assets, you will definitely be qualified for the loan but in the absence of your job, do you really think that you can make the monthly repayment promptly? What if you can't pay back on time? If you miss a few payments, you stand a high chance to lose your property. If you always have late payments, your credit score will be worse.

For people who have just lost their jobs recently, obtaining unsecured loan is still possible. But many lenders are smart. They usually consider your job as the index of your ability to repay the loan without default. If they know that you are currently jobless, some of them are still willing to offer you the loan but with very high interest. Let's think properly. Is it worthwhile to bear the cost? The high interest is actually your financial burden. Since you are currently having zero income, what is the point for you to rebuild your credit with such high interest?

To sum up; you don't need to rush to rebuild your credit when you are jobless. If you don't plan your finances well, you will be in deep trouble. Hence, understand your financial position clearly so that you will be able to make better decision. You should only consider getting a loan when you have unexpected financial emergencies.