Explore Some Proactive Steps You Could Take Once Your Debt Consolidation Loan Is Declined

When you are struggling to get out of spiraling debts and you get to know about debt consolidation loan, it seems like a ray of hope for you. Debt consolidation is a streamlined uncomplicated way of making your debt repayments far more manageable, paying less to the creditors and achieving financial stability. When people are going through a financial distress, they often consider consolidating their multiple debts for solving their debt issues. Debt consolidation is chosen for lowering the rate of interest and combining multiple payments into one single manageable payment every month. For many people in a financial mess, consolidation of debts is the only way out. However, it is not so easy to get a debt consolidation loan approval. Often many debt consolidation applications are declined. Do not be disheartened as there are some perfect solutions if your loan request has been disapproved. You must take certain proactive steps to make sure that your loan request is not declined the second time around.

Determine the Precise Reason Why Your Loan Request Was Disapproved

Debt consolidation lenders must have declined your loan request for some solid reason or the other. They are too happy to give away loans they have enough incentives for approving debt consolidation loans to qualified borrowers. That is precisely the way they would be earning their livelihood. So, rest assured that if a lender has disapproved your loan request, it would be for some concrete reason. Understanding clearly what went wrong or where were you lacking, would go a long way in understanding exactly where you stand and for giving you closure. Knowing the reason for your failure to get a debt consolidation loan approval, would help you to improve your situation and rectify your shortfalls before seeking a debt consolidation loan the next time. Here are some of the most common reasons why a debt consolidation loan request could be declined.

• You have no collateral or security to offer.
• There are issues with your credit score and credit report.
• Your income is not adequate for qualifying for a debt consolidation loan.
• Excessive debt.
• Not sufficient credit history

These are the top few reasons why people generally get their debt consolidation loan request declined.

Identify a Co-Signer for Your Loan

Suppose you are not able to meet the eligibility criteria for a debt consolidation loan, you may consider finding someone in the family or among your close friends who can qualify as per the loan requirements and convince him to co-sign your application for the loan along with you. The bank would not be refusing you the loan anymore because of the cosigner’s financial stability and strength.

This may look like an easy and really simple solution but your co-signer must seriously understand the implications of this. In the event you fail to repay the loan, it becomes his responsibility to repay the full loan amount with interest on your behalf. The bank or any other financial institution will hold him fully responsible if you ditch them. As per www.fha.com, a cosigner is not the same as a borrower. When someone co-signs a loan application, he just takes it upon himself to be responsible equally for the repayment of the debt that his friend or relative would be benefitted from.

Moreover, as per https://www.bankrate.com, as your co-signer already has good credit, he does not require more credit lines. When he co-signs a loan he takes all the associated risk of the loan upon himself but may experience only a wee bit of improvement in his credit score. Further, co-signing a loan could destroy families and relationships completely. A cosigner may find it difficult to get an approval for his own loan request in future.

Statistics have revealed that most of the co-signed loans would necessitate the co-signer to take charge of the payments at one point in time. As this could destroy or strain your relationship, love or bonding for your co-signer; it is important to tread with caution.

Stick Firmly to Your Budget & Avoid Debt Issues

One of the main factors leading to people looking for debt consolidation is failing to stick to the budget or spending without following any plan. This would surely culminate in more debt issues. Your spending needs to be perfectly planned to make sure that it is always less as compared to your monthly income. The debt would be building up naturally as you gradually start using credit for making ends meet.

Once you learn the art of living on a budget, you could steer clear of debts and even get rid of a whole lot of debts. Budgeting could gradually help you to emerge triumphantly and could assist you in eliminating the overpowering debts.

Deal with the Root Cause

Some people assume that by taking out a debt consolidation loan, they can get out of their financial crisis and reduce their debts automatically. This would not work unless they identify the root cause that culminated in this financial distress. Some individuals’ money issues crop up due to overuse of credit, a bad business, impulse spending, or not adequate work, or having an addiction, or not paying bills timely.

You must deal with the problem that is affecting your finances. It is best to effectively address the issue before looking for a financial solution. Your finances would go on deteriorating if you do not address the issue.

Conclusion: Consult a Credit Counselor If Loan Request Is Declined

If your debt consolidation loan request has been declined and you have explored all available options and are not certain about what else to do, you could get in touch with a qualified professional credit counselor who would be assisting you in giving you a sense of direction. A credit counselor could help chalk out your monthly budget and demonstrate all available options. We know that credit counseling organizations provide confidential appointments completely free of charge. This could prove to be a brilliant option particularly if you are confused about what things to do next. They would help you identify the real cause that led to the loan request denial.