Are You Qualified for the Debt Consolidation Loans?

Are You Qualified for the Debt Consolidation Loans?A large number of people find themselves stuck in the noose of never ending cycle of debt. As a result, they look forward to different options to get on to the right track to manage their finances better. Debt consolidation is one such method which can prove to be really beneficial in repairing your credit back to normal. It is a simple process in which all your credit cards and accounts will be consolidated so that forging only a single debt account. It should be noted that debt consolidation reduce the amount of money that needs to be  paid but the interest rates will be comparatively less while  providing you a  longer period of time to pay off the loan therefore reducing the stress levels to a  great extent. .

Every reputed loan company has its own criteria to be eligible for consolidate debt loan; however there are certain factors that most of the loan companies ponder over. Credit history of the loan applicant is considered substantial and is reviewed by the loan executives. One must note that, typically loan companies focus on the automatic scoring system to rank the credit.  Lenders bring into play your credit score to measure risk; your credit score is also an important aspect when deciding the interest rate you’re presented. Here are the four most important things the loan provider will typically contemplate over before sanctioning consolidate debt loan.

1. The first thing a loan company will look over is the applicant’s monthly income. By this, the lender wants to figure out if the person will be able to cover the payments or not. A paystub or recent tax returns may also be asked to be submitted as an evidence of your stable and steady job.  Also, some companies will call for a certain debt to income ratio, and that your monthly disposable income is between 10% and 15% of your gross income.

2. How has been your payment record till now? Or have you paid you previous bills on time?  While looking forward to the loan application, payment record is another important aspect the loan companies mull over.  It should also be noted that a few late payments can lead to higher interest rates than before. So, lackadaisical attitude towards timely payment of bills can even be the cause which can keep you from qualifying.

3. Companies seem to be very hesitant to lend chunk of money to the folks without collateral. In most cases, the loan companies will ask you for a decent amount of home equity to be eligible. Even, some creditors will agree to flexible their norms if you are a home owner as even if you not repay them, they can simply end up selling your house to get their money. However, one can still get consolidate debt loan even if you don’t have a home equity while it will be just be for a whole lot less.

4. How long you have been employed in the same company or from how many years you are living at the same place? Such points are also very important from the view of the consolidating credit companies; as it help them to know about the overall stability of the person, which in some cases even more important for them than the total income.

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