If you’re looking at debt consolidation loans, chances are your credit isn’t as good as it could be. Does this mean you won’t qualify? Before you lose hope, know that there are many options available to those with bad credit to consolidate their debt and begin efforts to improve their financial health. It can take time and dedication to dig out from maxed-out credit cards, medical bills, student loans, and other mounting debt. Working toward a solution and committing to the process will, over time, help you reach your financial goals and improve your credit. Here are some things to consider when qualifying for debt consolidation loans:
When you are facing mounting bills due to high-interest credit cards, student loans, medical bills and other debts that are impacting your credit score, it may make sense to consider a debt consolidation loan. These personal loans can help your financial situation (and mental health) by allowing you to pay off lingering debt, especially if you are getting collection calls and notices. Still, it’s not a miracle solution. Debt consolidation is a process that requires careful consideration before moving forward so that you can help yourself instead of making things even worse. Let’s look at the realities of debt consolidation.
Credit scores are some of the most important numbers attached to your financial status. Having a good credit score can help you get a good interest rate when you borrow money. Good scores can also get you better insurance premiums and better deals when you’re signing up with a new cell phone company or upgrading your cable package. FICO scores range from 300 to 850, and anything below 580 is considered fair or poor. Needless to say, fair or poor scores can cost you a lot.
If you’re like so many Americans and have debt, you may feel like you’ll never dig your way out. But relief could be closer than you think. There are many little-known solutions that are available to help consumers get back on track financially and reduce the stressful burden that comes from debt. Learning more about debt relief programs and debt consolidation loans can help you find the answer to your worries once and for all.
If you’re struggling under a mountain of debt, you may have already convinced yourself that you could never qualify for a personal loan. Well, think again. Although credit scores, income and debt-to-income ratios are certainly considered when candidates apply for personal loans, it may be easier than you think to receive a loan that could help improve your financial situation by shrinking that mountain. Here’s a look at what lenders are looking for when making personal loan decisions.
What Lenders Look For
Not surprisingly, the first thing that lenders look at when deciding whether to offer someone a personal loan is their credit history. This is the detailed report that shows how you have managed credit and payments over the years. Associated with the credit history is your credit score, which is usually between 300 and 850; the higher the score, the lower the risk for lenders. But even if you have a lower number, that doesn’t mean a loan is impossible.
Lenders also consider your ability to make payments — namely, your income and employment history. They look at your current debts and create what is known as a debt-to-income ratio. If your personal loan is secured with collateral, the lenders evaluate the value and equity of the collateral. Often, this is your car or home. They may want to know about any savings or assets you have beyond your collateral that could help repay the loan. Finally, they want to know how you plan to spend the loan proceeds.
Credit Scores Impact Terms
Because a personal loan is an installment loan, the debt is less damaging to your credit score than credit card debt. In fact, because a personal loan offers diversity in your credit, it can even improve your credit history. Of course, if you already have years of damage to your credit score, lenders have to consider the future risk.
Overall, when the risk is higher, the terms are less favorable to the consumer. You may have to pay the loan off over fewer years, or perhaps the interest rate would not be as low for someone with worse credit. While the terms are impacted, it is still possible to receive a personal loan as a way to begin rebuilding your credit and find debt relief.
Small Loans Are Still Possible
If you have trouble getting a personal loan by yourself due to a poor credit history, don’t give up hope. There are many options still available. First, you could enlist the help of a co-signer to act as a personal loan co-applicant. If they have a positive credit history, it could boost your chances. Another option is to apply for a smaller personal loan. This presents the lender with less risk and also gives you the opportunity to pay down some of your high-interest credit card debt. If you have collateral, that can also help you get a secured loan. The point is, there are many options that are worth considering as you create a debt management plan for yourself. Personal loans are just one tool you can use to achieve fiscal health.
Ready to learn more about whether you could qualify for a personal loan? Click on Refi.com’s personal loan page to begin the process today.
Bills, bills, bills — if you dread the walk to the mailbox or answering your phone, you may be searching for your own version of a miracle. Debt in the form of high-interest credit cards, student loans, medical bills, and so many other ways causes stress and worry that can take over your life. But there is a solution — debt consolidation loans provide an answer for thousands of individuals who were considering bankruptcy as a way to regain control of their finances.
Money owed is money owed, right? Not exactly. Debts can differ dramatically, especially when it comes to which debts can be consolidated and the ways lenders can work to recover what was borrowed. There are two major types of debts: secured debt and unsecured debt. If you understand the difference, you can better understand your financial health as you work your way out of debt and get on the path to a stronger fiscal future. Let’s take an in-depth look at the different kinds of debt so you can make informed decisions as you work to prioritize your repayment process.
Are you at the point where you’re too stressed out to check your mail or answer your phone, for fear it’s a collections agent, another bill, or any sort of unpleasant reminder that you are struggling under the weight of debt? You’re not alone. High-interest credit card debts, medical bills, student loans, home equity loans, and many other kinds of debt can stack up quickly, making it difficult to imagine there’s a solution to repair your credit history, pay off your debts in a responsible way and maintain your dignity.