Being in debt can be a worrying time, but there is plenty of information available on the internet which will show you that you are not alone. If you are considering consolidating your debts, then here are the top five reasons that your loan request might be refused.
Too Much Debt
One of the biggest reasons that people are refused a consolidation loan is that they have too much debt. They have gotten themselves into a situation where they have stretched their finances too far. A good rule of thumb is that if your monthly payments exceed 40% of your incoming, then it is deemed as too much of a risk to offer a further loan. A debt consolidation company will have all of the criteria that they use for making a decision clearly displayed on their website. As such, it is worth your time to shop around and check out each company in turn and see what their requirements are for you to be eligible.
No Collateral
Another factor which could prevent you from getting a consolidation loan is that you have no collateral at all. You may be able to get a guarantor for your loan which some companies may accept, often the levels of interest that these companies charge will be higher. If you do not own your home or car or have anything else of value, you may struggle in getting a loan.
Not Earning Enough Money
You may also find that your level of income can have a big effect on whether you will be eligible for a loan or not. If you do not earn enough money when compared to the amount you need to lend, then the banks or financial institutes may end up refusing your application.
A Bad Credit Score
If your circumstances are particularly dire, then your credit score may be so small that the majority of credit companies will refuse your loan application. You may still be able to get a loan, but you will find that as you are a high risk, the charges and interest that the company will charge will reflect this, meaning that you will have to pay more.
Not Enough Credit History
You may think that if you have not used any credit before then, this will work in your favour, but you would be mistaken. Just as with having a bad credit score, having no history can also ring alarm bells with financial companies, so they may refuse your loan as they cannot see enough of your credit history.
If you think that you may be eligible for a consolidation loan, make sure that you speak to as many different companies as possible. Shopping around will help you to get the best deal available and start your way on the road to financial recovery. Getting into debt is not the end of the world, and many people have been there before you. Make the changes to your life to get you out of debt as quickly as you can, and then start planning for a better financial future.
