If you are intent on using debt consolidation loan, you need to remember that your choice alone will not mean you will end up using this method. You need to be subjected to the approval of the lender before you can really use it as your debt solution. Because of this simple fact, you should have a backup plan to ensure that you will not be hindered in your quest to get out of debt.
So what can you do when you are declined the loan that will allow you to have the funds to pay off your debts?
First of all, you have to find out why you were declined. If this is because you have a low income and the amount that you are loaning is not enough to cover the payments, then you will surely be declined. The same is true if your income is not stable. You will be deemed as a high risk borrower by the lender and that will either lead to a high interest rate or worse, disapproval of your loan. It can also be your credit history. If your credit report shows that you had been late on your payments, your lenders will be wary before they lend you money.
While some lenders may give you a chance, you can very well expect that your loan is burdened with high interest rates. So a simple application to another lending company could give you the loan that you needed to push through with your debt consolidation intentions.
Most of the time, it involves your credit report so you need to work on this. It involves a lot of hard work and you need to pay attention to where your money goes to. Create a budget and a payment plan that will allow you to meet your monthly dues without fail. You should also make sure that you will not open another credit to keep your score low. Try not to add to your debt amount so that your score will slowly and steadily rise. By then, you can probably apply for another loan and push through with your debt relief option.
Of course, there is another type of debt consolidation that does not involve loans and that is debt management. If you like the single and lower monthly payment scheme, then you will also get that by enrolling in a debt management program. The debt counselor who will be assigned to your account will help analyze your finances so you can create a debt management plan. This will contain your lowered monthly payments over a much longer period. Once approved by the creditor, all you have to do is to send the total monthly payment for all your enrolled debts and the counselor will take charge of distributing it.
As you work on all of your debts, make sure that you are not ignoring the bigger problem here. The mounting debts, inability to afford payments and the loan disapproval are all indications of a struggling financial health. Since you have a lowered payment, you may want to use the freed funds to grow your savings. Use this opportunity to make yourself financially stable.