If you happen to be someone who has a lot of different types of debt then you might want to consider opting for a debt consolidation loan. Opting for a debt consolidation loan is always considered to be a great move but you might run into trouble if you happen to be someone with bad credit. Fortunately, in today’s day and age, there are some lenders who are known to provide debt consolidation loans in spite of bad credit because they take a lot of factors into consideration for qualifying someone for the loan, over and above the credit score. You can substantially improve your chances of getting approved by spending a few months towards paying down debt instead of spending the same money on nonessential expenses. After you have done, you are advised to look around for lenders who might take your recent efforts into consideration and approve your debt consolidation loan. Read on further to know about some of the most important tips that can help you in securing a debt consolidation loan despite having bad credit. Let’s get started!
4 steps for securing a debt consolidation loan despite bad credit
Many people who struggle with debt often end up opting for debt consolidation loans and you are highly advised to do the same. However for securing a debt consolidation loan you will need to meet some criteria. First, you should have a credit score somewhere in the mid-600s, then you need to demonstrate a proven and verifiable track record of timely payments along with sufficient income. This is just a basic idea of the things lenders look for while approving loans. Not every lender might work according to this specific set of criteria and they might have their own specific requirements. You can begin with the following steps to find the right loan along with considerably boosting your chances of approval.
1. Monitor your credit score :- It should come as no surprise to you to know that most lenders base their loan approval decisions mostly on the condition on the credit of an individual. Mostly it has been seen that the lower your credit score, the higher the rates you will be offered by lenders on financing. If you intend to qualify for a debt consolidation bad credit UK loan then it you will have to meet the minimum requirement of the lender. Usually this score is in the mid-600 range but there are some lenders out there who might accept credit scores as low as 580. Checking and monitoring your credit score in today’s day and age is very easy. For doing so you can avail the services of some of the free tools offered by different banks. Once you have figured out your credit score, you should begin looking out for lenders that might be willing to work with you.
2. Look around :- Regardless of your bad credit score, you will surely be offered loans, given the amount of bad credit lenders out there. But the advice here is not to accept the first loan offer that you get. Instead, what you should do is to take your own sweet time in researching and comparing loan amounts, repayment terms along with fees for more than one source. Doing this bit might take you some time but it will eventually be good for you in the long-run as you will potentially be able to save hundreds and thousands of dollars. Perhaps the best place to begin might be online lenders where you can check rates without hurting your credit score. You might also want to consider the offers that you are getting from your existing bank because if you happen to have a good relationship with them then they might be willing to over your bad credit and might approve your debt consolidation bad credit UK loan.
3. Consider secured loans :-Debt consolidation loans are mostly unsecured which means that they don’t require collateral. But if you have been struggling in getting approved for an unsecured consolidation loan then you might want to consider getting approved for a secured loan. For getting secured loans approved you might have to offer some collateral and that can be anything from a vehicle to a residential property or some other type of asset. You will have to provide some collateral which is valuable enough to cover the loan amount in case you end up defaulting. Because of these reasons, it is much easier to get secured loans approved than getting unsecured debt consolidation bad credit UK loans approved.
4. Improve your credit score :- If you have tried every trick and tip and still have failed to get a debt consolidation bad credit UK loan approved then you might want to consider holding off and taking some time to build a much-better credit score. Stop spending on non-essential items, save money and make it your goal to pay monthly debts on time. Make a decent plan to ensure that you are allocating more money towards debt payment on a monthly basis. Once you have built decent momentum, you can schedule an appointment with lenders to review your efforts and then you can apply for a debt consolidation bad credit UK loan.
The Bottom Line
There you go. Those were the top 4 tips that you need to follow if you intend to get your debt consolidation bad credit UK loan approved. For such loans, sometimes it can get very difficult to figure out which lender you should approach. You are advised to begin with credit unions and local banks and if things don’t work out with them then you can consider approaching online lenders.