This consumer is looking for a lender who will lend him $45,000 to help him deal with an emergency and also consolidate his credit card debt. Many home owners experience emergencies from time to time associated with their homes. In his case, he needs a new roof and also must repair some collateral damage to the roof structure. This will be expensive and he does not have the emergency funds set aside for this type of an expense.
He also has approximately $20,000 in credit card debt spread over several credit cards. He is only paying the minimum monthly payment which means he is paying a high interest rate on the unpaid balance. The interest rate on credit cards varies between 18% to as high as 29%. Needless to say, this is an expense most people can do without.
He also has a bad credit rating which is making it difficult for him to find a lender to lend the money to him at a reasonable rate. If he can consolidate the credit card debt and the emergency repairs with a low interest rate loan, he will have a much more manageable monthly payment. The difficulty is finding a lender who will be willing to take the risk of lending money to someone with bad credit.
Fortunately for this consumer, he and his wife have relatively secure jobs with good income. Their monthly payments for utilities and car loans are only 33% of their income which is very reasonable. One of the reasons his credit rating is so bad is that he missed several payment to his utilities. He can fix this situation by setting up automatic payment instructions on his account. If he consolidates his credit card debt and closes several of the accounts, his credit rating will improve.
Bottom line for anyone reading this post is always pay your bills on time, never miss a payment, limit your credit cards to 2 or 3 at the most and always pay your balance on time and in full each month. If you cannot pay the balance on the statement date maybe you should not purchase the item in the first place.
Our consumer should be able to repair his credit rating relatively easily, although it will take a few years before his rating is adjusted. In the mean time he has the right approach regarding consolidating his credit card debt and also the repairs to his roof. He will have one low monthly payment provided he can arrange for low interest rate loan with a reasonable term. Most important for this consumer is that he must focus on paying the monthly payments each and every month until the loan is fully paid. In addition he must limit his credit card purchases to avoid getting into a similar situation in a few months or years.