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Advice on Getting a Debt Consolidation Loan - The Bills.com Blog
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Advice on Getting a Debt Consolidation Loan
Question: My husband and i have very bad credit we have about 7000 in debt and would like to get one personal loan unsecured to pay this debt off and have one payment. My husband has a full time job where hes been 10 years, I'm a stay at home mom. He belongs to a credit union. My question is do you think we could get approvedeven if at a high interest rate if we agree to have the payments directly taken out of his pay check ??? the debt we have is 2 credit cards totaling 5000 2 pay day loans totaling 1000 and a family loan totaling 1000 would greatly appreciate any advice you could give!!!! Thanks
Answer: While I do not think it is impossible for you to find a loan, I expect that you have a lot of work ahead of you, and you should expect to pay a premium in interest and costs for any loan you are able to obtain. I do not want to sound totally discouraging, though. Your ability to qualify for a loan will depend on several factors aside from your credit score, including your income (and your "Debt-to-Income" ratio), your performance on other secured accounts, and the amount of money you have available for a down payment (and your consequent "Loan-to-Value"). If you have a good income, you may be able to find a decent loan despite your credit problems.
If you own a home, a secured debt consolidation loan may be right for you. This type of loan is essentially a home equity loan which is used to pay off your other creditors. Secured consolidation loans help many consumers by consolidating all of their debts into a single monthly payment with a lower interest rate
and payment amount. Also, even with poor credit, you should be able to find a lender willing to loan you the money you need, as the loan will be secured by your home. However, be careful before you borrow money against your home to pay off credit cards and unsecured loans; you are converting what was previously unsecured debt into secured debt. This could cause you problems down the road if for some reason you are unable to make your payments, or if life circumstances force you to file bankruptcy, as you may not be able to discharge the secured debt as you would unsecured debt. However, secured debt consolidation loans work for many people, so this is an option to consider carefully–the Bills.com Savings Center is a great resource to help you find a lender for this type of loan.
A possible alternative loan resource you may want to explore is www.Prosper.com a site which puts private lenders in contact with private borrowers. A private lender may be more willing extend you a loan than a traditional bank. If you cannot find a loan that suits your needs, you may want to continue working on your credit score. The more you can increase your credit score, the better loan terms you will be able to obtain. There
are many steps you can take to help improve your credit score. The most important thing you can do is resolve any outstanding delinquent accounts, then make sure to make all payments to your creditors in a timely manner. Having several accounts with long histories of timely payment should have a positive influence of your credit rating. If you do not have many credit accounts, such as credit cards, you may want to open some new accounts to help you build a positive credit history. Ideally, you should pay off the balance of your credit cards each month, but if that is not possible, at least make your minimum payments on time to help build your credit score. For more information about credit and ways to improve your credit score, I encourage you to visit the Bills.com credit resources page.
Depending on your income and amount of debt, one of the several options I have described above may be able to help you. I encourage you to explore the debt help section on Bills.com, to read more about these and other options available to you.
Good luck. I hope this advice helps you Find. Learn. Save.
Bill
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