Find an Unsecured Consolidation Loan
After you determine debt consolidation is your best option for managing your debt, you may find the process of looking for help a bit discouraging. Lending companies are more than willing to provide loans using your home as collateral, but locating an unsecured consolidation loan may lead you to businesses of questionable ethics. You do have legitimate lending options available as long as you’re willing to devote a little extra time to the process.
Think like the lender
It’s natural to think you deserve an unsecured consolidation loan because you make your current payments. Once you eliminate those, it reasons that you can afford a lower total payment. When you look at it from a lender’s perspective, it isn’t always so black and white.
Consider the fact that your current debt is spread between a number of lenders, effectively limiting each company’s risk in the event you default on your loans. With a consolidation loan, one lender takes on the risk of all the creditors. When you get an unsecured loan, you offer no tangible guarantee that the lender will ever see that money again.
Evaluate yourself as a borrower
Your credit score and income are two important factors in your ability to find an unsecured consolidation loan. Learn what your credit score says about you. A low rating coupled with a history of late payments and collection activity indicates high risk to the lender. A high debt to income ratio can say you live beyond your means, whether or not you consolidate your debt.
Look at your options
Sometimes, the amount you wish to borrow is impossible to receive in the form of an unsecured consolidation loan based on your credit and income. When this happens, know that your bank is not the only company able to assist you. Consider a credit counseling agency.
Not every credit counselor offers debt consolidation loans to clients, but they will provide you help making your budget and analyzing your spending, making it possible to break your bad financial habits. You may also receive a debt management plan offer from them. Instead of refinancing all your existing debt into one account, your credit counselor acts as your liaison with your creditors. They accept one monthly payment from you and use the majority of the funds to pay each loan. After you’ve been in the debt management plan for a set period, they may offer the unsecured consolidation loan you originally wanted.