What Can I Do if I Was Declined for a Debt Consolidation Loan?
Paying back your debts can be much easier with a consolidation loan.
However, there are situations in which you might be declined for one.
Thankfully, there are a handful of alternatives to consider if you’re having money problems that keep piling up due to your credit history.
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1. Changing the way you manage your budget
One of the first big changes to make regardless if you were accepted or declined for a debt consolidation loan is to change the way you manage your budget.
No matter how much you can borrow, you’re still going to have to pay it back eventually.
A common reason for running into money problems in the first place is neglecting your budget management.
If you want to live more comfortably with financial freedom, start by adopting better money management practices.
This starts by examining your incoming and outgoing money and reducing your expenses to a bare minimum.
Slowly but surely, you’ll start to realize what you can and can’t afford.
Developing a modest approach to your life will greatly help you solve future debt issues and give you the financial freedom you’re looking for.
2. Uncover the reasons why you’re in debt in the first place
Make sure you uncover the reasons why you’re in debt in the first place.
A debt consolidation loan is usually considered a last resort but it doesn’t clear you of your debts–you still have to pay someone in the end.
Finding out why you’re having financial difficulties is the key to understanding how you get into debt in the first place.
Most of the time, money issues stem from poor budgeting, but you could also be in a bad situation due to your employment conditions, existing financial commitments or not having enough income.
Finding a solution to the reason why you’re in debt in the first place can be difficult since it involves digging into your past, but it’s a sure way to find out the issue and prevent it from happening again.
3. Put the debt on your mortgage
Every now and then, you might find it acceptable to put your credit debts onto your mortgage.
This is thanks to falling home prices in parts of the country and can be a great way to consolidate debt without the need for a formal debt consolidation loan.
If your mortgage is less than the value of your home, then this could be an option for you.
While you’re essentially creating a second mortgage to pay off your debts, it can offer significantly lower interest rates and repayment terms that can suit your financial situation.
However, it’s still important to follow the first two tips even if you do this so that you can prevent getting into money problems in the first place.
4. Find someone to co-sign your consolidated debt loan
While you might have been rejected for your consolidated debt loan, you might still be able to apply successfully by finding a friend or family member that does qualify and asking them to co-sign the loan for you.
If successful, the bank can then qualify you for a debt consolidation loan based on the co-signer’s financial health and not just yours.
This is usually a great solution if you and your co-signer have mutual trust.
However, do keep in mind that your money problems will become theirs as well.
They will need to make payments to your loan should you be unable to make them yourself, meaning it could stain your relationship with the co-signer or even bankrupt them if you’re not careful.
The last thing you want is to drag someone else down with you.
5. Speak to a credit counsellor for more advice
One of the most reliable ways to overcome your debt is to simply speak to a qualified credit counsellor.
This should be considered a last option if you’ve done everything you can and nothing is working.
Credit counselling will point you in the right direction by helping you budget expenses, paying back your debts in a timely fashion and also ensuring that you’re aware of all of the financial options available to you.