Reasons Why Your Debt Consolidation Loan Was Deniedthehomemortgage
Debt consolidation is like a savior when the number of bills and payments to be made is increasing and your monthly income is still the same. The payments usually become so high, you start spending more than you earn. At this point a debt consolidation loan could be your only silver lining. If this is the case, then it would come as a great disappointment to see a “rejected” stamp on your debt consolidation loan application. But don’t worry, there could be a very valid reason for this declined status and hopefully you can work on changing that in time! Figure out why your debt consolidation application was rejected with these pointers:
- Credit score and credit history: Debt consolidation is a loan like any other despite the rumors. A lender would definitely check your credit score and credit history to determine if you are a viable candidate. Having a decent credit history can work in your favor in terms of rates as well. Make sure your credit score has not been impacted drastically because of the many loans by making as many timely payments as possible. This can work towards an easier process.
- Amount of debt: Consolidation options are of no use if you are pretty much in the pit of money you do not make. This can happen when you are accustomed to paying only the minimum payments. If your amount is very high, it is highly unlikely that you will qualify for a debt consolidation loan. At this stage, you can consult with a mortgage broker such as Leading Edge Mortgage Experts to find the perfect solution for your problems.
- Income is poor: Most debt consolidation applications are denied or rejected due to the income status of the candidate. Most people tend to use their mortgage borrowings or credit card allowances to spend more than they can afford with their income and only pay the minimum amount each month. This obviously impacts the income status as you have borrowed much more than you can pay off. This is an immediate decision factor for the lenders.
- Lack of history: If you have a very thin folder which contain the papers relating to your credit history, it automatically implies that you do not have experience with the way credit is to be handled. This can be a red warning sign to any lender. They will not be able to trust you enough to give you an unsecured loan at low rates. You will either be rejected, or you will have to settle for a secured loan at very high rates, which might make this an unaffordable venture.
- Mistakes in the documents: The documents which you have filed may have some errors. The history reports, payment information and other data should have been entered correctly. If this is not the case, your lender may reject your debt consolidation application on the grounds of false information. To avoid this you can hire a mortgage broker to fill out the paperwork.