FAQs
Insufficient credit history or poor payment history can also lead to a denial of a debt consolidation loan. Remember, your payment history is the most important factor in your credit score, comprising 35% of your FICO® Score. Even one missed payment can damage your score.
Why am I not eligible for a debt consolidation loan? ›
A lender will use your credit report as well as their own lending criteria to make a decision on whether they will offer a loan. If you are not on the electoral register or if you have recently moved jobs or house, then these factors can affect a lender's decision to decline a loan application.
How hard is it to get approved for a debt consolidation loan? ›
You'll typically need a credit score of at least 700 to qualify for a debt consolidation loan with a competitive interest rate. Although a lower credit score doesn't automatically equal a denial, as some lenders offer loans for bad credit, the borrowing costs will likely be higher.
What are my options if I can't get a debt consolidation loan? ›
If you don't qualify for a consolidated debt loan on your own, you may be able to find a family member or friend who does qualify and get them to co-sign the loan with you. The bank can then qualify you for the loan based on the financial strength of your co-signer.
What credit score is needed for a debt consolidation loan? ›
Every lender sets its own guidelines when it comes to minimum credit score requirements for debt consolidation loans. However, it's likely lenders will require a minimum score between 580 and 680.
What score do you need to consolidate debt? ›
Generally, borrowers with scores of 740 or higher will receive the best interest rates, followed by those in the 739 to 670 range. If your credit score is lower than 670, debt consolidation may not be a good option for you.
What is the best debt consolidation company? ›
Best debt consolidation loans
- SoFi: Best for fast funding.
- Upgrade: Best for poor or thin credit.
- Achieve: Best for quick approval decisions.
- LendingClub: Best for co-borrowers.
- Discover: Best for excellent credit.
- Happy Money: Best for credit card consolidation.
- LightStream: Best for large loans.
Does everyone get approved for debt consolidation loan? ›
If you have excellent credit, high income and are borrowing a relatively small amount of money, it can be easy to get approved for a debt consolidation loan. On the other hand, if you have poor credit, low income and are applying for a large loan, it may be difficult to get approved.
Can I get a government loan to pay off debt? ›
While there are no government debt relief grants, there is free money to pay other bills, which should lead to paying off debt because it frees up funds. The biggest grant the government offers may be housing vouchers for those who qualify. The local housing authority pays the landlord directly.
Can anyone get approved for debt consolidation? ›
In general, your chances of getting a debt consolidation loan are better if you have a good credit score, usually defined as 670 or above by FICO. In some cases, your credit report may have errors that are bringing your score down, so first, you'll want to check your credit report to make sure everything is correct.
Lenders might not advertise it, but most of them have a minimum credit score required to get a loan. If your score is less than 670, you might be out of luck for a debt consolidation loan. Even if you're over 670, a problematic debt-to-income ratio (more on that below) or payment history could derail your loan.
What is the alternative to consolidation? ›
An alternative to consolidation is debt relief, not to be confused with federal debt forgiveness proposals using the same name. 8 Rather, it's when a company negotiates with your creditors on your behalf.
How to get a debt consolidation loan with high debt to income ratio? ›
Here are some steps you can take to lower your DTI and make yourself a more attractive candidate for a loan.
- Pay off loans early. Lowering the amount of debt you have is the fastest way to improve your DTI.
- Increase income. ...
- Reduce spending. ...
- Credit report. ...
- Balance transfer card. ...
- Refinance loans.