A debt consolidation loan lets you consolidate multiple debts, leaving you with one monthly payment. You may also be eligible for a lower interest rate than the old debts. This can help you save money, and possibly pay off your debt quicker.
For a loan consolidation, you’ll need good credit. But there are strategies that will help you get approved. Consult with us:
There are three ways you can get bad credit debt consolidation loans:
- Review your credit history
- Compare loan rates
- Improve your debt-to-income ratio for better rates
1. Examine your credit history
Lenders will evaluate your credit in order to determine your creditworthiness. To make sure your credit history is as strong and as accurate as possible, it is vital to do a credit check.
You can use a site like Dedebt.com to access your credit reports from each of the three credit bureaus.
For a chance to improve your credit score and correct any mistakes in your credit report, be sure to contact the credit bureaus. You have better chances of being approved for a debt consolidation loan if your credit history is clean.
Below, you can quickly compare the prequalified rates of Credible’s partner lender lenders. Some lenders offer personal loans for people with bad or fair credit.
2. Compare loan rates
There are many lenders who offer personal loans to consolidate your debt. Each loan amount, term and fee is different. Do your homework and compare rates from as many lenders to find the right loan.
Be aware that poor credit will likely prevent you from being eligible for the lowest rate. You can find the best rate for you by comparing lenders.
3. Improve your debt-to-income ratio for better rates
Lenders examine your debt-to income (DTI), to determine how much money goes towards debt. Calculate your DTI ratio by adding up all monthly bill payments and then dividing that number by your monthly income.
There are a few ways that you can improve your DTI.
- Your income can be increased.Your income will decrease the amount you can spend on debt, as you earn more. A raise or a side-hustle might be a good option to increase your income.
- Reduce your debt.A consolidation loan could be possible if you pay down some of the debt.
It is also important to calculate the total cost of debt consolidation loans over time. This will allow you to plan for possible additional costs. Use our personal loan calculator to estimate how much you will pay for a loan.