Guaranteed Debt Consolidation Loans with Bad Credit

Have you ever asked yourself the question, can I find a guaranteed personal loan or a guaranteed debt consolidation loan? In short, no one offers guaranteed loans and no lender can guarantee approval. This being said, lenders, these days have widely different requirements. Most lenders check the industry standard credit report sites, while others only check to verify income.

Some lenders are less risk-averse than others, meaning they will lend to individuals with a lower credit score than other lenders..

Requirements for a Debt Consolidation Loan

  • The base requirements for being eligible for a loan is age, the individual must be at least 18 years old.
  • The second most common requirement is the individuals income. $800 per month is usually the base requirement but many lenders prefer a much higher income. This requirement does vary, as some lenders may require much less.

Debt Consolidation Loan Offers and Credit Scores

Those with a bad credit score will not be offered a competitive or favorable debt consolidation loan. The options will be fewer and at a higher interest rate. A lower credit score usually means a higher interest rate.

While this may be discouraging, many options exist these days for those with bad credit scores.

550 and above: Use the pre-approval process to apply for a debt consolidation loan. The pre-approval process uses a soft credit check and does not hurt one’s credit score.
480-550: A score is this range is lower than what the majority of lenders would like to see, but it is not unheard of that lenders will lend to people with this credit score.
Once again, use the pre-approval process to see what is offered.
480 and lower: Lender criteria do vary quite widely, and some lenders may be comfortable lending to people with this credit score, although this is usually not the case. A score of 480 and lower is likely to be to low for most lenders. One is best trying to improve their credit score.

No Credit Check Loans

No credit check loans, loans where the lender use a so called alternative credit check. You may think this is a loan that is easy to secure even with a bad credit, but the name is somewhat misleading. For the truth is that all lenders perform checks. There are 3 main types of credit checks:

  1. Hard Credit Check: Does affect one’s credit score. A Hard check is usually performed when one has applied and accepted a loan offer.
  2. Soft Credit Check: No negative affect to one’s credit score. Usually used for pre-approval and self credit check.
  3. Alternative Credit Check: Common with payday loans, but others may use this type as well. The lender only checks for a legitimate source of income.

Bad Credit and Interest Rates

Debt consolidation loans for bad credit is possible, although most won’t offer a lower interest rate. Check below for our recommendated options.

Options For Those With Bad Credit

If your credit score is less than good, then the best solution to help is to improve the score as much as possible. There is several ways to achieve this, as well as a couple of important things to keep in mind.

Lowering Credit Utilization Ratio: A credit score is not solely determined by payment history; it is determined by many other factors. One of these factors is the Credit Utilization Ratio. In simple terms, it measures the amount of one’s extended credit currently used. For example, say someone has a credit card with a limit of $2000 and a balance of $500. This person’s credit utilization ratio would be 25% as 25% of their available credit has been used.

Lower Income to Debt (DTI) Ratio: The less of one’s monthly income used to pay off debts the more likely it will be that a lender will lend to someone.

Consider Balance Transfers For Credit Card with a High Interest Rate: Many credit card companies offer promotions on balance transfers in which no interest is charged for 6 months after the balance transfer. The no-interest period often allows for a more effective and greater loan payment as no interest has to be collected. Usually best to do this with the credit card that has the highest balance and highest interest rate.

Applying To More Than One Lender: Today there is many lenders who are willing to lend money to those with bad credit. When applying for a debt consolidation loan, these companies will only do a soft credit check.

Split Loan Into Multiple Loans: Sometimes lenders will not approve a bigger new loan with bad credit. A solution to this is to split up the loan into two separate smaller ones. For example, if someone was seeking a consolidation loan for $20,000 they may have a hard time securing a loan for $20,000 with bad credit. Instead, we feel that applying for two $10,000 loans may be a better and easier option but remember that this also means that you will have two monthly payments.

How Much Can One Expect To Borrow: The golden rule here is that lenders prefer that the total debt don’t exceed 200% of your yearly gross income. For example, a person earning $25,000 per year before taxes can borrow $50,000.

The Debt Snowball Method: This is a commonly used debt reduction strategy. Put simply, The minimum payment is made to all outstanding debts except for the one with the smallest balance. All available funds for debt payment is focused on the debt with the smallest remaining loan amount.

The Debt Avalanche Method: A aggressive debt reduction strategy. Your primary target is the debts with high interest rates, starting with the highest, and then with the largest balance. The aim is to reduce the amount of interest which is paid as fast as possible and to only keep the loans with a lower interest rate. This in turn will reduce the monthly payment of interest. Then keep doing monthly payments until the loan with the highest interest has been paid in full.

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