Many banks and credit unions provide personal loans to consolidate credit card debt or high-interest loans. If you’re trying to pay down your high-interest debts using a debt consolidation loan, here are some tips to help you get approved for it:
Determine How Much You Need To Borrow
Before you apply for a personal loan, it’s helpful to know how much you need to borrow. To calculate this, add up all the debts you plan to refinance or consolidate. Although you may not require this information immediately, it helps you avoid asking for an exceptionally high amount because you have an idea about how much you need.
Choose A Loan Type
Personal loans are primarily of two types—secured and unsecured. Secured loans require you to provide collateral, such as your car or home, which can be seized by the lender if you fall behind on your payments. These loans have more lenient credit requirements than unsecured loans and have lower interest rates.
Unsecured loans are high-interest-rate loans and depend mainly on your creditworthiness and ability to repay. To get approved for this kind of loan, you’ll need higher credit.
Find The Right Lender
Every financial institution is different, and you’ll have to enquire with different lenders about their interest rates and loan terms before choosing one. You may also have to pick a lender based on the one which is most to approve your loan application. However, don’t simply pick the one which presents you with the first offer. Make sure you carefully read the fine print and the terms of all the loans you’re considering.
Know Your Credit
You should know what your credit looks like before you apply for a loan, so check both your credit score and credit report.
You can check your credit report for free once a year with each of the three credit bureaus by visiting AnnualCreditReport.com. Also, analyze your report carefully to ensure there are no errors as these can lower your chances of getting a loan. If you find errors, dispute them with the concerned credit bureau and get them removed from your report.
It’s also a good idea to create a checklist of all the documentation you’ll need for the loan application so that your application isn’t complete, and you’re granted the loan.
