What Should You Do When Your Debt Consolidation Loan Application Is Declined
After analyzing all your finances, and evaluating your debts, you seemed to have ultimately opted for debt consolidation. You must have done ample research, checked, and compared the rates and chosen the best lender who would be providing you with the loan you are looking for. After submitting an application for debt consolidation loan, you are now informed that your loan request has been denied. You must be frustrated and all your dreams of a debt-free life seem to be shattered. However, do not lose hope. You need to take certain proactive steps so that your debt consolidation loan application is not declined the next time.
Figure Out Why Exactly Your Loan Was Denied
Even though you are beginning to panic, there is actually no reason to panic. You have done enough research to know that you have other effective options for eliminating your debts. However, before you think of another debt relief option, it is mandatory for you to know exactly what had gone wrong and why you were denied a debt consolidation loan.
It is really critical because you may have made just a simple mistake otherwise your loan could have been approved. You certainly have the right to demand an explanation for declining your debt consolidation loan. Here are some common reasons why your debt consolidation loan request has been declined.
Not Adequate Income: If your application was declined because of your low income, at this juncture, you have nothing much to do. However, if you are having some other source of income, you could inform the lender about that. In this context, you must understand that if a lender feels that you do not have the capacity to make the necessary payments, they have the full authority to decline your loan request. You could now get an approval by lowering your loan amount. Ask the lender exactly what amount they think you could afford with your current income.
Excessive Debts: Excessive debt amount could be another common reason for loan rejection. If your lender feels that you are already having too many debts and if you add another one things could get out of your hand, they are free to reject your debt consolidation loan application. In this connection, you could put in your loan request to another lender who is known to provide exclusively debt consolidation loans and is fully aware of the nitty-gritty of debt consolidation.
Poor Credit Score: In many cases, a debt consolidation loan request is declined if the applicant has a poor credit score. If your loan request has been denied because of low credit score, you must examine your credit report and meticulously examine if all your records are correct and updated.
If you are actually having a poor credit score the background for loan disapproval is pretty strong. If on the other hand, you find that there are certain discrepancies present in your credit report you could inform your lender. Thereafter, you must consider sending the credit bureau a letter of dispute so that the error could be investigated.
A genuine issue of poor credit score needs serious attention and you need to take certain active steps toward practicing proper payment behavior and efficient financial management. You could enhance your credit score by lowering your debts.
Start Living Strictly on a Budget
Most people land up with a heavy burden of debts because they fail to do proper planning of their spending that leads to more financial issues. If you do not plan your spending as per a pre-determined household budget, you would sink in debts. Your monthly spending must necessarily be less as compared to your income every month.
If you inculcate the good habit of planning the spending effectively and living consciously on a budget you could effectively avoid falling deeper into debts and ultimately get out of debts successfully. Remember when all else fails, budgeting could be your best bet.
Reduce Debts Effectively By Solving Your Issues
Some people are trying to get a debt consolidation hoping that it would be taking them out of their existing financial crisis and effectively reduce their debts. But they must appreciate the fact that they need to, first of all, understand the issues that led to such a financial crisis. Many of you fall into trouble because of certain factors such as impulse spending, over-using credit, a bad business, not paying off bills timely, not adequate work, or even an addiction.
If you are having an issue that is actually straining your finances, it is a wise decision to consider addressing such an issue before opting for a debt relief option. Otherwise, if the issue continues, your finances would go on deteriorating and your consolidation would ultimately be of no use.
Identify a Co-Signer Willing to Sign on Your Debt Consolidation Loan application
If you fail to pass the eligibility test for your debt consolidation loan request, it is best to locate a close friend or family who would be easily qualifying and convince them to cosign your loan request with you. The lending institution could be approving your loan application based on the financial strength of the co-signer.
This may be looking like a simple solution but this sort of an agreement must be signed carefully and with serious intentions. There should be a clear understanding of the fact that in the event you fail to make your loan repayments, it would be the responsibility of your co-signer to clear the dues on your behalf. The bank or any other financial agency would hold your co-signer 100 percent responsible for your debt consolidation loan until all the dues are cleared.
You must not be disheartened if you fail to get an approval for your debt consolidation loan application. Take certain proactive measures. Follow the above-discussed tips and try to make amends so that your next debt consolidation loan application is not declined. When you have exhausted all your options, you could seek the professional assistance of a qualified credit counselor. A good credit counselor would be helping you in chalking out a household budget and present to you all the available options.