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What To Do If No Bank Will Approve A Consolidation Loan

This consumer would like to be approved for a consolidation loan for his credit cards and personal loans. His credit is bad, but he feels he should be able to find a lender that will approve his loan request. To date he has been turned down by several banks including his own local bank that he deals with. He cannot understand why, even though his credit rating is not in good shape. He requested that we help him understand why he is being declined and if we can assist in finding a lender.

There are six main reasons why consumers are turned down for debt consolidation loans. Once he understands these reasons, he can then do something about it and work on being approved for a loan. In most cases it is not just one area that needs to be focused on. Usually there are several areas that need to be addressed. The following are the top six reasons consumers are turned down for a loan:

Lack of security for debt consolidation loan – many lenders like to have security or collateral to support the loan in case the borrower is unable to repay the loan. For many it means that no security means no loan.

Poor credit scores and credit report troubles – this is a big one. If you have a lot of credit cards, missed payments, owe too much etc your scores will drop and this can be a red flag to many lenders.

Insufficient income to qualify for a debt loan – lenders compare your income level to all of the debt payments that you make including car loans, personal loans, rent or mortgage payments, property taxes and credit card debt. While a consolidation loan usually means that you pay less interest due to lower interest rates, the monthly payments are higher. Higher payments mean you pay off the loan more quickly than you would if you stick with the credit card debt. Anytime you exceed 35% payments compared to gross salary, lenders start getting nervous.

Lack of credit history in country where you live – if you have only been in the country for a short while or have not borrowed money before, you may not have a credit rating at all. Often students fall into this category as well as new immigrants.

Having too much debt – similar to not having enough income to support the debt you owe. If you owe too much already, lenders may not want to consider you for a loan of any type let alone a consolidation loan.

Lack of time on job – You might have the best job going, but if you have only been there for a short time, lenders view this as a possible risk area. They look for stability and earning power.

Depending which of these areas applies to you, there is still something that can be done to help you qualify for a debt consolidation loan. For example, a letter from your employer confirming your employment, especially if you are still being assessed could help. Previous long term employment records along with reasons for leaving might be another. Taking a second job to increase income levels, documenting the issues associated with your credit report and rating can be additional areas to look at. Sometimes a co-signor will also work, however the co-signor must be aware that if you fail to make your payments, they will become responsible for the remaining debt.

Finally, credit counseling, debt negotiation and worst case, bankruptcy solutions can also be considered. Bankruptcy is a last resort and will have profound impacts on your future ability to borrow money.

DEFAULT LOAN APPLICATION FOR BORROWER’S INFORMATION

Home/Mortgage Loan Amount : $35,000

Home Loan Application and Processing Speed (when do you need the funds): as soon as possible, I have been looking for a week with no results

Do you currently have a mortgage? : no

Bank Name and Branch : Bank of America, Bristol St

What City/Town, State and County do you live in? :Santa Ana

Zip : 92704

What is your employment field? : Operations Management

Employment Position : Operations manager

When are you paid? (monthly/weekly/biweekly): bi-weekly

Your credit rating to be – excellent, fair, or bad? : bad

How did you find us? : looking online for what to do when no bank will approve a consolidation loan

How are you paid? (direct deposit/paper check): Direct deposit

Gross Amount Per Paycheck : 2500

Do you agree to have this information published online, without your PRIVATE information of course? : sure, maybe it will help other people who are looking for consolidation loans

Extra information here please (some detail): I have been to my own bank and several others looking for a consolidation loan. None of them will approve me for a loan. I guess it is my bad credit rating and the amount that I owe to creditors.

I am trying to consolidate several credit card debts and a personal loan. If I can consolidate this debt, my interest payable will be less and my monthly payments will be less. This is the best thing for me to do, but no one will approve my consolidation loan.

I have a steady job as an operations manager in a small company here in the city. I have been here 6 months and really enjoy the job. I rent an apartment here in the city and my wife also works in retail.

We lost control of our finances at one point, built up too much debt and ended up with a bad credit rating. We also missed a couple payments which did not help. I am being fully open here about my situation with the hope that you can do something to help us obtain a loan at a descent interest rate.

We have learned our lesson and now never miss a payment. We also are very interested in making sure that we pay the minimum amount of interest as well. Any suggestions you can make in this regard would be appreciated. I would also like to know what I can do to find a lender to approve a consolidated loan and what might be the road block.

Any suggestions you can make in addition to finding a lender for us will be much appreciated.