Filling Out a Debt Consolidation Loan Application
If you're overwhelmed by debts and bills, a debt consolidation loan may offer the financial relief you need to avoid late fees and maintain a favorable credit rating. A debt consolidation loan combines all of your financial obligations into a single loan, with one monthly payment. Most consolidation loans also offer a lower interest rate than the rates you're currently paying on your loans.
A debt consolidation loan typically includes unsecured debts, such as credit card debts or medical loans that are issued without collateral. Unpaid bills may also be wrapped into a consolidation loan. Secured debts, like a mortgage or car loan, are usually not included. Federal student loans may be consolidated through the US Department of Education or a financial institution that offers specialized consolidation for these debts.
Debt consolidation loans are available through banks, credit unions and other financial institutions, but that doesn't mean you should dismiss the need to alter spending habits. To find the most affordable interest rates, compare quotes from a number of lenders before you commit to a loan. Credit counseling agencies can help you find debt consolidation or debt management programs.
When you fill out the loan application, you will be asked to provide basic information about yourself, including your name, date of birth, address and telephone number. You may be asked for your Social Security number, so that your credit history can be confirmed. You may asked for information about your current employer and your monthly household income. These details allow a prospective lender to determine whether you would be a good candidate for a loan.
As part of the application, you may be asked to provide a list of your creditors, the balances on your loans and the interest rates. Gathering information about your debts may seem like a daunting task.. Many borrowers avoid looking at their balances and interest rates because they feel so overwhelmed by their debts. However, once you've recorded all of your balances and interest rates, you may have a sense of hope and optimism about your financial future.
Financial History and References
In a debt consolidation loan application, you may be asked to provide details about your financial assets. Your home, car and other valuable property that you own are considered assets. You may also be asked to provide information about your current savings and investment accounts. This information will help lenders evaluate your financial health when they're considering your application. For many borrowers seeking debt consolidation loans, their liabilities, or debts, exceed their assets.
A financial institution will evaluate your credit report when considering your application. Your credit report includes data about your current and past debts, your employment history and the addresses where you have lived. To ensure that you have a strong chance of qualifying for a loan, request a copy of your report and review it for any errors. Errors in your loans, your employment history or even your addresses could affect your chances of qualifying for a loan.
For a bank or credit union, a debt consolidation loan presents a certain amount of risk. A financial institution may ask for personal references, including relatives, friends or co-workers. Your references should be close enough to you to know your whereabouts if anything should happen to you.
Filling out a debt consolidation loan application is a positive step towards improving your credit. After your lender has reviewed your documents and verified your credit and employment history, you will be contacted about your approval status. Some applicants must apply with more than one lender or modify the terms of their loan request before they are approved.
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