Debt Consolidation Loans

Will You Qualify for a Debt Consolidation Loan?

Just because you see debt consolidation loans are advertised frequently doesn’t mean these loans are easy to get. Like other loans, debt consolidation loans have approval criteria that must be met before you can be approved for the loan. If you don’t meet the criteria, unfortunately, you may not be approved. Save yourself the trouble of applying and being denied by checking the qualification criteria first.

Check Your Own Credit First

Before you shop around for debt consolidation loans, check your credit to see where you stand. Review your credit report to see if you have any unpaid debt collections or past due balances since these will have an impact on your ability to borrow a loan. Then, check your credit score to gauge where you stand. Credit scores generally range from 300 to 850. The higher your credit score is, the better chance you have of being approved for a debt consolidation loan. If your credit score is in the 500s you have a very small chance of getting approved at all.

Ask for the Approval Criteria

Once you’ve found a lender that you want to borrow the debt consolidation loan from, ask about their approval criteria. The lender probably has at least a minimum credit score and income rating that’s required for a certain loan amount. If you know you have certain delinquencies on your credit report, ask about the likelihood that you’ll be approved with that information on your credit report. Asking these questions upfront will give you an idea of whether you’ll get approved or not. If it seems like your credit history won’t meet the lender’s criteria, save yourself the credit inquiry and look elsewhere.

Avoid Scams

Any debt consolidation loan that guarantees approval without ever checking your credit history is more than likely a scam. All lenders do some type of credit check before they can tell you whether you’re approved, how much you’re approved for, and the rate you’ll have to pay on the loan. Don’t get too excited about any type of loan guarantee. It may backfire.

Using Home Equity

If you have home equity that you can borrow from, there may be more relaxed credit standards since your home will secure the debt consolidation loan. However, you may face a higher interest rate based on a lower credit score.

Other Options

If you don’t qualify for a debt consolidation loan and you don’t have home equity, there are still other options for dealing with your debt. Credit counseling, debt settlement, and finally bankruptcy are all worth considering.

Related posts:

1. How to Know When Debt Consolidation is Right for You
2. Benefits of Consolidating Debt With a Home Equity Loan
3. Tips to Avoid a Debt Consolidation Scam
4. Warning: How to Spot a Debt Consolidation Scam
5. Disadvantages of Debt Consolidation
6. Clearing Up the Confusion Between Debt Consolidation and Credit Counseling
7. What to Look for in a Debt Consolidation Loan
8. 6 Ways to Consolidate Your Debt
9. Debt Consolidation Loans Help You Simplify Debt Payments
10. Benefits of Debt Consolidation

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