Debt Consolidation Loan with Bad Credit: 3 Steps to Securing Approval
Are you looking for answers to your questions on how to get debt consolidation loan approval with bad credit? You’ve come to the right place!
When you have debt from many different sources, keeping track of – and paying – your monthly bills can be tricky. Luckily, debt consolidation loan providers can help you to keep track of and pay off your loans, enabling you to become debt-free. Often, however, qualifying for a debt consolidation loan may seem daunting, especially if you have bad credit. Luckily, even if your credit rating is poor, there are still steps you can take to secure loan approval.
Step 1: Get a Secured Loan
If you own a home, or have a 401k plan, then even with bad credit, obtaining a loan can be relatively easy. The key is to take out a secured loan, in which you offer the loan provider your home or your 401k plan as collateral. Banks are more likely to grant secured loans, because secured loans offer the banks a measure of protection against default. Because the bank has this measure of protection, it is less concerned with your credit rating, making it easier for you to be approved even if your credit rating is poor.
Step 2: Use a Co-Signer
Often, banks are hesitant to provide loans to people with bad credit, because they believe that to do so would be risky. One solution to that problem is to ask someone with good credit to be your co-signer. The person you ask to be a co-signer signs a document promising to pay the bank back if you can’t. Getting someone with good credit to be your co-signer means that the bank is less worried about your credit, because they know that someone with good credit has agreed to pay them back in case of emergency.
Because being a co-signer is a big responsibility, it’s recommended to only ask someone who you trust and feel close to. Remember – in order for the co-signer agreement to work, the person who you ask must have a good credit rating.
Step 3: Get a Peer-to-Peer Loan
If you’re having trouble with the banks, you can also choose to eschew the banks altogether by taking out a peer-to-peer loan, which may have looser requirements for approval.
Peer-to-peer loans take place online. You find a provider (like Accredited Debt Relief or Prosper – both highly respected firms), and fill out some financial details, at which point you will be provided with different quotes.
Your loan request and profile will appear on the provider’s website, where different lenders can see your information and make a decision about whether or not to give you the loan. Once a lender agrees to give you the loan, it gets transferred directly to your bank account. The process is relatively fast and easy -- sometimes you can receive the cash in as little as 48 hours.
Now that you know how to get debt consolidation loan approval with bad credit, make sure you stay on track and avoid falling into any debt consolidation traps along the way.