Potential Reasons Your Debt Consolidation Loan Application Was Rejected


Debt relief is a complex and difficult process. Prior to applying for a consolidation mortgage, you should start to plan your debt repayment. There are many methods to repay debt. However, we recommend you compare snowball to avalanche. These strategies are designed to help you stop the debt cycle as soon as possible. Your credit score. The consolidation loan is also possible available via consolidationnow.com

Perhaps you have exhausted all other options and now want to borrow money to make your repayments easier. Although debt consolidation loans can be a popular product from many lenders, they can sometimes prove difficult to obtain. If you’ve been denied, it’s likely that you are wondering what went wrong. You can find out how you can improve your chances next time.

Here are the top quatre reasons why you may be declined for a consolidation loan.

Have poor credit or have insufficient credit history

Before lending you money, credit consolidation companies will ask for proof of credit. This might seem unfair because you are looking for a loan in order to correct your past mistakes. However, lenders should know that what they lend you you will get back.

Look into ways to get past due payments off your credit report. Most late payments will disappear within a few year. So if it’s possible to wait to apply, your chances of being approved for a debt consolidation loan may increase.

Because lenders don’t have enough time to look at your payment history to verify that you won’t be at high risk, they can turn down a request for a debt consolidation loan. You may also be turned down if your credit rating isn’t good enough and you have debt problems.

There wasn’t enough guarantee

To secure your loan, many debt consolidation lenders will ask for collateral. This is to ensure that you don’t stop making payments. Each financial institution may require different amounts and types of collateral. This is why it is important you inquire about what collateral you will need prior to submitting your request. If you have already been declined, speak to your potential lender to find out if it is possible to offer additional collateral. To be approved for a loan, you may need to temporarily surrender your car’s title or add a position to the home. These are valuable assets that you have to give up. Consider the implications (as well the possibility of losing) if you’re unable to repay the loan.

Your income was too low to justify taking on the risk

If you are in deep debt and can’t pay the bills, your application may be rejected. Your lender may take into consideration the amount you ask and the interest rates you currently receive. This will be compared to the amount you make with each paycheck. If the numbers don’t match, your lender may conclude that you are unable or unwilling to pay your loan. If this is the case, it might be worth obtaining records of income from side jobs, concert work, or child support.

If you don’t have any additional income sources, consider taking steps to increase it. You can ask your employer to raise you or start a side company online. Your income can be increased to give you better financial results next time you apply debt consolidation. You might even be eligible for a side business online that will allow you to make enough to pay off your debt.

You’ve already applied for several loans or credit card cards.

You may be declined if your credit history shows an increase in loan or credit card application. It might seem counterintuitive because you are trying multiple ways to pay off your debt. However, lenders don’t see this as a problem. Numerous recent inquiries indicate that not only are your financial circumstances dire, but no other lender seems inclined to allow you to borrow money from them.

If you want to avoid this, make sure to work with lenders with whom you have a strong relationship. They may be more likely to approve additional lines of credit or loans for your accounts. If they are not interested, you could try hard money or payday lenders. These lenders don’t pull any credit reports. However, there will be a cost to not using your credit history. Payday lenders have no governing bodies, so they do not have to comply with any laws regarding the maximum loan amount. You could even end up in more debt because of their predatory interest rates or repayment terms.

The bottom line

If your application has been rejected for a consolidation loan for debt, it could be because you are too risky. Talk to the lender about your options. Ask if they have any other way to show proof you will repay this loan. If that doesn’t work, speak with your creditors to discuss repayment options.


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