When you realize that you have bad credit, either through checking your credit report yourself, or having been turned down for a loan, you should consider getting a debt consolidation loan to help you repair the bad credit rating and work towards paying off your bills.

If you contact a credit counsellor, the first advice you may receive is to get a debt consolidation loan. Such an item showing up on a credit report is good for you because it shows lenders that you are working towards repairing bad credit and trying to improve your credit report. A debt consolidation should always be considered before filing for bankruptcy. There are many benefits to taking out a loan to consolidate all your debts:

	One monthly payment. All your debts are combined into one loan and you only have one payment to contend with. This can be arranged to suit your income and sometimes you can get a loan at low interest rates.
	Any past charges and penalties are automatically wiped out or drastically reduced. The debt consolidation loan takes care of all those for you.
	A debt consolidation loan allows you to become debt-free a lot sooner than you expected. This greatly improves the rating you receive on your credit report.

When you receive a debt consolidation loan, you do not have to give up your credit cards to the lender. It’s up to you what you do with them, but good advice would be to get rid of them. You should keep one for emergencies, but if you start using it to purchase everything that catches your eye, you may end up back in financial trouble. Credit cards are good, but you should try to spend only what you can afford to pay back at the end of the month.

Banks will readily agree to a debt consolidation loan, more so than a personal loan, which only adds to your ever-increasing debt load. They have credit counsellors available who can negotiate on your behalf with your creditors if you wish to lower payments or accept partial payments of accounts. You do not have to feel as if there is nowhere to turn if you have a bad credit report.