There is no guarantee that you will qualify for a Debt Consolidation Loan. If you own a house with equity, you will probably qualify at your bank for a secured line of credit or second mortgage, or you can refinance your mortgage to consolidate your debts with a Mortgage Debt Consolidation. However, if you don’t own a house, or if your house has no equity, you may not qualify.
If you are rejected for a loan, here are the steps you should take:
- Ask the bank why you were declined. It may be that you are close to qualifying, so if you can reduce your debt or increase your income you may be able to re-apply again in six months or a year.
- If your bank won’t give you a mortgage, consider talking to a mortgage broker. They have access to many different lenders, so they may be able to get you a mortgage even when the bank says “no”.
- Consider asking a friend or family member to co-sign for you.
WARNING: If a friend or family member agrees to co-sign for you, they are now fully responsible for your loan. If you don’t make the payments, the bank can now pursue your co-signer for payment. You should only ask a friend or family member to co-sign on your behalf if you are absolutely certain that you can make all of the payments. If you are afraid that you may at some point miss a payment, do not get a co-signer.WARNING: Each time you apply for a loan and are rejected, a note appears on your credit report showing that you were rejected. Your credit score goes down each time you are rejected for a loan. If you are rejected, ask the bank why you were rejected. If you can take action to qualify in the future (perhaps by increasing your income, or paying off some of your old debts) then wait until you have fixed the problems before applying again. A series of rejections will make it even harder to borrow in the future.
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