Why Can’t I Get a Loan to Consolidate Debt?
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It is important to remember that lenders base their entire business model on granting loans to people, so they can make money from the interest. So, if you have had a Debt Consolidation Loan application declined, there must be a reason. Read on to find out what the most common reasons are for a declined Consolidation Loan application.
There are three common reasons for a declined Consolidation Loan application:
Your lender will collect information from you regarding your income and monthly outgoings, in order to decide whether you can afford the loan. If the lender doesn’t think that you have enough income to cover the loan repayments along with any other outgoings you have declared, then you will likely be declined.
You Have Too Much Debt
If your levels of debt are already quite high, and your lender thinks you may already be struggling, then they could be reluctant to grant you more debt. For a Consolidation Loan, you would have to show which debts you plan to pay off. This could make a difference.
Low Credit Score
Your credit score shows potential lenders how ‘trustworthy’ you are to crediters. It takes into account your track record of paying debt off and making repayments on time.
If your credit score is low, there aren’t too many things you can do to fix it in the short term. Some lenders may still offer you a loan, but with a higher interest rate. Be careful with this, since it will push up your repayments. You will need to decide how much this impacts on affordability and whether or not it is still worth it.