When you have numerous credit accounts and you are looking to consolidate them by putting all the balances into one credit account, you need to carefully check out your options. Depending on what kind of bad credit you do currently have, you can choose between three major ways of re-organizing your finances and getting rid of your bad credit. Depending on your credit situation and your credit score you will choose the best options. Still some methods are more popular than others and some “so called experts” will tell you this or that instead of rushing into taking out a new credit consolidation product.

Your first option is to take out an unsecured personal loan.  You have to know that your possibilities are limited there, as most lenders have a maximum amount they would lend anyone on an unsecured basis and if you do have a poor credit score, you might find it difficult to get accepted.

On the other hand there is less risk for you in unsecured personal loans, as there is a fixed APR and a fixed repayment making it much easier for you to work out your budgeting. But there is more risk for lenders in unsecured lending, and it definitely shows in the interest rates, although they are still usually lower than the ones on credit cards or on the so called “emergency loans”. But you cannot lose your house or car if you are not paying your loan, although you will get charged and the default notes will get filed very quickly.

You can also choose to start with consolidating your bad credit card debt first. You can look for balance transfers that offer an initial zero percent period but you need to consider the interest rate after this period is over. Being an unsecured finance it is also a small risk for you, unless you are not making any payments in the first initial interest free year, because then you will soon find yourself in a much bigger credit problem than before.

It is much easier to get accepted for a balance transfer credit card than a personal loan, but you cannot really predict your monthly repayments, as the interest is calculated monthly, if not daily. You are usually not able to move loan balances to zero percent credit cards, so only use this option if all the bad credit you have is on credit cards.

The third, and I would say most popular option is taking a secured loan, if you have a house, or you can actually do it by remortgaging as well. Secured loans usually come with a much lower interest rate, but are sometimes, just like mortgages, are tied to the base interest rate, therefore your repayments can change. Some products do come with a much longer term and higher maximum amount than unsecured loans, therefore if you have a larger amount of bad credit, it is the way to go. You do although have to consider that if you do not keep up your repayments, your properties can be repossessed.