If you have debt on more than one credit card, there’s a good chance that you have recently received an application for one of the many debt consolidation loans available on the market. Assuming that you receive an application that promises good terms and the chance to combine all of your debt at a better interest rate, here are a few tips on getting approved:
- You first need to decide if you want to pursue a secured loan or an unsecured loan. This can make quite a difference in your interest rate. Most of the offers that you receive in the mail are for unsecured loans, meaning that they depend on your credit score and do not involve any collateral put up on your part. The result can often be a “deal” that is not a deal after all. If you pursue a secured loan, your chances for approval will skyrocket if you put up a house as collateral. In order to get the best terms for debt consolidation loans, consider going after a secured loan as a first option. They are harder to obtain, but much more favorable in the long run. The extra work to get one should be well worth it to you for years to come.
- If an unsecured loan is your only option, it is wise to ensure that when you apply for one, you are not coming off the opening of a new credit line. This will really hurt your score. In the weeks or months leading up to your application for an unsecured loan, try your absolute best to be up to date on all of your payments and do NOT open any new credit card accounts and use them. This might require you to live quite miserly for a few months, but if you are serious about getting out of debt, you will do whatever it takes to get a good loan at a lower interest rate, increasing substantially the probability of you living debt free.
- Obviously, the final tip would be to NOT buy anything on credit after you have paid off all of your cards with your debt consolidation loan. This will only re-start the vicious cycle. Do not be tempted by that £0 balance on your credit card. Keep it there at all costs and live within your means as you begin your new life as a debt-free consumer.
In summary, getting approved for one of the many loans to consolidate your debts available on the market can be as simple as offering up a bit of collateral during the loan application process. If, however, you have no true collateral, do all that you can to boost your credit score at the time of your application, meaning that you do not open any new credit accounts and you do not put anything on credit in the weeks and months leading up to your application. Debt consolidation loans can be a true life-saver if used in the right way. If you want to hear more contact us today for a debt consolidation quote or simply to hear more about your options.