[ad_1]
We have credit scores in the 500s, and we are being declined for loans to consolidate our debt to improve our credit.
We understand the importance of improving our credit scores and are frustrated that the debt consolidation we have been advised to apply for is not working out — no approvals. Who can we turn to for a loan?
-D.
Dear D.,
When you have a smorgasbord of debts, life feels like a juggling act. So many due dates, so many interest rates, so many terms and conditions to keep track of.
Then you see the claims in the ads for debt collection loans. Get rid of high-interest credit card debt today! One low monthly payment!
It sounds like a magic little pill that will cure all your financial ailments, right? If only it were that simple.
Unfortunately — as you’ve learned — the people who could benefit most from a debt consolidation loan often don’t qualify. Most lenders require a credit score of at least 620.
You could try applying through a credit union, though membership is required. Unlike big banks, credit unions tend to look beyond your credit score at your overall financial health when you’re seeking a loan.
You can also use websites like Credible, Even Financial or Fiona to shop around for loans. (No, none of them paid me to say that.) But keep in mind that many of the lenders these sites partner with will also require a credit score in the 600s.
While you might be able to consolidate with a lower credit score, you’ll often pay astronomical interest rates — sometimes as much as 30% — which kind of makes the cure as bad as the disease.
But here’s the thing about debt consolidation: Often the benefit is more psychological than mathematical. Sure, life would be a lot simpler with a single monthly payment, but if you can’t lock in a lower interest rate, debt consolidation won’t save you money.
You say you want to consolidate to improve your credit score. If you have enough money to make at…
[ad_2]
Source link
