Almost 20% of people contacting Debt Support Trust in the last month tried to get a consolidation loan first, however their loan applications were rejected.
When you apply for a loan often a footprint is left on your credit file to show that an application has been made. When you're rejected then apply elsewhere this footprint is visible and can make being accepted even tougher.
In society, credit is considered to be good (typically) and debt bad. Which is why you may decide the consolidation loan route is the best option. So, what are the next steps if you are rejected for a loan?
Consolidate Debts with One Loan
Before the credit crunch, consolidation loans were relatively easy to access and certainly easier to be accepted for than in today's financial climate. For many people, their plan to consolidate debt is a good one, especially when they're paying high interest on existing debts.
Some financial institutions will advertise rates for consolidating debts into an easily repayable loan, but it's often not as straight forward to be accepted. The criteria, often affordability, is the one area which means people are rejected for a loan.
Steven from Manchester told us "I have 6 debts totalling £14,000 and the interest rates are high. I'm paying over £700 each month and I don't see the debts going down. I applied for a loan which would have made my payments more affordable each month and I would have been debt free in 4 years, but I was rejected".
It's frustrating being rejected for a loan, but often it's the lenders policies which determine if they are willing to take the risk and lend. At Debt Support Trust we're certainly helping more people unable to obtain a loan to deal with their problematic debts.
Loan Rejecting: What's Next?
After being rejected for a loan there are a number of things you can do. The first is to check your credit file. Is there any inaccurate information on your credit file which could improve your chances of being accepted? You could also ask the lender why you were rejected.
Is another loan the correct answer and would it be affordable to repay even in the toughest months, like birthdays and Christmas? Often another form of credit prolongs a debt problem but doesn't actually resolve the issue.
If you're struggling with debt then why not complete a statement of affairs with Debt Support Trust? This is where we look at your income, expenditure, disposable income, assets and level of debt. You'll then be able to see how much you can realistically afford to repay towards unsecured debts each month. Our advisers will offer you every scenario, along with the positives and negatives, to resolve the debts so that you're empowered to make an informed decision about your financial future.
A loan to consolidate debts could be your best option or your unsecured debts may best be rectified with a debt solution. Speaking to a debt adviser at Debt Support Trust will help you better grasp your debts and understand which options you have.