Debt Consolidation Loans with Bad Credit: Beautify your Application

It is difficult to secure debt consolidation loans with bad credit  Many regular banks are reluctant to provide credit to people with less than perfect financial histories. However, there are lenders that are willing to take on the risk.  If you can prove you are a credit worthy individual,l there are options available. Consolidating your debt can help avoid bankruptcy and can improve your credit in the future. When applying, prepare your application carefully and provide the lender with the many reasons that make you credit worthy.

Provide Character References

Character references may come from anyone, but a family member would not typically be used. Find someone that will attest to your ability to make payments and meet financial requirements in writing and by phone. Also, if your current situation is not a true reflection of your normal routine, find someone that knew you prior to your current situation and have them write a statement. For example, if you made timely rental payments to your previous landlord before buying your home, have your landlord write a statement for you.  Third party debtors, whomever they may be, can attest to your financial honesty and history of payments. They can help shed light on the circumstances that lead you to your recent bad credit due to bad loan practices, divorce, or medical problem, etc..

Create a Personal Statement

Your personal statement should address all credit obstacles.  Don't leave anything out, be as thourough as possible.  Address all late payments or defaults and explain the circumstances that lead to your financial demise or hardship. Provide documents, if available and necessary, from doctors, lawyers or any other official document that archives your recent struggle. Keep in mind, that things are not as difficult to document as we would assume.  For example, If you were laid off, a previous employer can provide you with a statement discussing the situations surrounding the lay off.

Provide Income Statements

It is important to document your income and can be especially helpful to highlight your work history, if you have been employed with the same employer for a few years.  Additionally, documenting a trend in increased earning can help build the lender's confidence in your ability to pay. Income statements can include all form of payments you receive such as commissions, bonuses or dividends. If you work more than one job or have additional income from alimony or child support, providing this information to the lender is valuable as well because it can show your true financial picture.

Show You are Not Leaving

Do you own a home or business in your area? Does your family live close by? Are your children in school? All of these factors can contribute to your desire to stay put where you live currently. A lender may be afraid you will jump ship once your current debts are consolidated and paid off, leaving the new lender stranded. Show them you are trustworthy and they can reach you any time, for years to come. You may even want to provide the new lender with family contact information.

Get a Co-Signer

Co-signers are a great option for those people who need assitance due to poor credit histories. Unfortunately, if you use a co-signer, your credit will not be repaired as quickly as having  your own account. However, using a co-signer may be the only option to provide you with the funds to consolidate and pay off your current debt. This alone will help your credit score and your peace of mind. Ask the lender if having a co-signer will expedite your application process.


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