How to Get from Here to There
Any true bad credit consolidation via another loan or refinancing will require you to apply and meet the qualification requirements for the new loan. This criteria hurdle will vary from lender to lender, depending on their internal guidelines for taking on risk and approving loans. Having a home will definitely help, but again it involves risks to your home ownership noted above. Further, involving your home in the deal will have added steps as your home will need to be appraised for current market value.
Any loans associated with real estate or a valuable asset are considered secured loans. Loans that have no such collateral are considered unsecured loans. A secured loan, due to having collateral, will likely give you a lower interest rate. An unsecured loan will have a higher interest rate charged, but you have no assets at risk in comparison.
Lenders look for two things when they consider your application: 1) your ability to pay the loan back to them over time, and 2) the amount of debt you want to consolidate. Your income information and related data help ascertain your ability to make payment. If all looks good, generally the lender will make a loan available. However, other factors unrelated to you can make things more difficult. One example is today’s current economic condition; banks are tighter on credit right now as many banks made too many bad loans to homebuyers during the last five years, and are far more cautious than in recent years, often with more strict lending practices.
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