Credit crunch – consolidating your debts
During a credit crunch, debt consolidation loans (as with any other form of credit) may be harder and/or more expensive to obtain than usual – particularly for people who have a poor credit score – as lenders are taking fewer risks with their money.So why might your credit score affect your chances of getting a debt consolidation loan?To give you an idea as to why this may be – and what you could actually do about it – take a look at the following points:Study your credit report for any errorsIf you study your report and find any errors, you are legally entitled to have them corrected.
Attempt to resolve any problems on your credit report
Entries such as CCJs (County Court Judgments) can’t be removed and will stay on your credit report for 6 years. However, if you can afford to settle the outstanding debt, you can have them recorded as ‘satisfied’.Open a bank account
Opening a bank account could improve your chances of being approved for a debt consolidation loan. Having a bank account will show potential lenders that you are used to handling money.
Register on the electoral roll
Lenders will be able to confirm your identity more easily and more quickly if you register to vote. This can improve your chances of obtaining a debt consolidation loan.Look for the ‘right lender’
Some people will just apply for every debt consolidation loan they find. However, by doing this, they may be damaging their credit rating. Their report will show that they have applied for many loans, and if these applications haven’t led to an offer of credit, then it may look like they’re desperate for money – but no-one wants to lend to them. It’s a good idea to look for a lender who specialises in helping people in your situation.
