The Ultimate Guide to Consolidation Loans for Fair Credit
So, you’ve run into a situation with mounting debt. Student loans, credit cards, personal loans or other types of credit are weighing you down. You are looking for ways to simplify your debt repayment and even cheapen it, if possible. Unfortunately, you only have a fair credit score so it might not be possible to get additional credit. What are your options?
Below we take a look at how consolidation loans for fair credit can be a solution for you!
Best Options for Debt Consolidation for Those with Fair Credit
There are many ways in which you can consolidate your debt. Yes, if you only have a fair credit score it can seem like your options are limited, but there are in fact solutions for you out there. Here are the best options available for borrowers with fair credit.
Peer-to-peer lending (or P2P lending) is different from borrowing money from traditional banks and lenders. With P2P lending, investors pool their money into what is called an investment. Then, borrowers can borrow money from this pool. The investors make their returns from the borrowers’ repayments which is paid back with interest. These types of loans sometimes have easier eligibility criteria than traditional loans. This can be a great option for borrowers with a fair credit score, like yourself. P2P forms of credit can easily serve as consolidation loans for fair credit.
Credit Card Balance Transfer
This option can be handy if you have more than one credit card with outstanding balances. With a credit card balance transfer, you are essentially transferring all your credit card debt onto one credit card. It will be a good idea to move it to the card with the lowest interest rate. This will ensure cheaper monthly payments and lower cost of debt.
The tricky part of this option is finding a credit card that allows the following:
- A zero (or very low) debt transferal fee
- A card limit higher than your total current debt
- A low interest rate that cheapens your repayments
If you can find a credit card which fulfills these requirements, it could be a good consolidation loan for fair credit option.
Consolidation Loans (Personal Loans)
The simplest way to consolidate all your debts is to take out another loan with which you can pay off all your existing loans. The important part is to make sure this loan has better and cheaper loan terms when compared to your current loans.
Personal loans are great forms of credit. It is unsecured and you don’t need to supply collateral when you apply. Some personal loans have lower eligibility criteria than other loans as well. Even immigrants without a U.S. credit report or score can apply for some personal loans. This makes personal loans great options for consolidation loans for fair credit.
Consolidation Loans for Fair Credit
Let’s take a look at how consolidation loans for fair credit work. There are 4 general steps you will need to follow to get your consolidation loans for fair credit:
There are many consolidation loan options out there. So, shop around and compare the loan terms and interest rate offered by different lenders. It is important to find the best option for you. Check the eligibility criteria for each solution and only apply for the ones you know you are eligible for.
Supply all the necessary documentation to prove your eligibility for consolidation loans for fair credit. This is almost like submitting a CV. The information you supply to the lenders will determine the loan offer you get. You should supply all relevant documentation to increase your chances of getting a loan. Immigrants will need to supply valid visas, work permits, and other documentation to prove they are legal in the U.S. and have the ability to repay the loan. Some lenders may schedule a follow-up call to confirm the last few details before giving you a loan offer.
You will receive feedback from the lender after submitting your application. The period you will have to wait for feedback will depend on the lender. Some will supply feedback as soon as 24 hours of submitting your application. Some lenders may take longer.
If you qualify for the loan you applied for, the lender will provide you with a loan offer. It’s important to only pick consolidation loans for fair credit that will benefit your financial wellbeing. Know your current interest rates and tally the total of your monthly debt repayments. Then, compare it to the loan offers you received. Pick the option with the best repayment terms, lowest interest rates, and ultimately the lowest monthly repayment when compared to your current loans.
If you accept the loan, you can sign the loan documents the lender provided and return the paperwork to the lender.
The loan will be disbursed within a certain period determined by your lender. With consolidation loans for fair credit, you will either receive the full amount in your account or the debts to be consolidated will be settled on your behalf.
After your loan has been disbursed, the only thing left to do is to start your repayments to your new lender. Most lenders provide an online autopay option. With autopay, your monthly repayments will automatically be deducted from your account. You won’t have to worry about a missed loan payment again!
3 Best Consolidation Loans for Fair Credit
If you are considering getting consolidation loans for fair credit, take a look at our 3 best options below.
Stilt, a groundbreaking online lender, is focused on supplying top quality financial services to the underserved and overlooked. Stilt provides loans to immigrants and people without credit scores (with the proper eligibility documentation of course). Stilt offers the following:
- APR between 7.99% and 15.99%
- Loan terms of 6 months to 2 years
- Loan amounts between $1,000 to $25,000
- No minimum credit score requirements
- Visa holders and immigrants welcome
- No origination fees, prepayment penalties or administration fees apply
- Do not require a green card or social security number
- Does not require a cosigner
Stilt offers really good consolidation loans for fair credit. You will get a competitive offer from them and a good interest rate – even with fair credit.
Avant is an online lender that was started in 2012. They operate in both the United States and in the United Kingdom. Avant can offer you the following:
- APR from 9.95% to 35.99%
- Loan amounts between $2,000 – $35,000
- Loan terms of 2 to 5 years
- Requires a minimum credit score of 580
- An administrative fee of 4,75% of the loan amount applies
- Penalties for late and unsuccessful payments apply
Avant’s personal loans can serve as consolidation loans for fair credit. Just watch out for the different fees which apply and reckon that into your total cost of debt.
Freedomplus was started in 2013 with headquarters in San Mateo, California. Freedomplus offers the following:
- APR from 7.93% to 29.99%
- Loan amounts ranging from $10,000 to $40,000
- Terms that stretches between 2 and 5 years
- Minimum credit score of 640 required
- An origination fee between 0% and 5% applies
- Fees for late and unsuccessful payments apply
If you meet the minimum credit score requirement, Freedomplus could be a good option for consolidation loans for fair credit. Remember to keep the origination fee in mind!
How to Improve Your Chances of Approval for a Consolidation Loan
With a fair credit score, you want to make every application count. Since your options are slightly more limited than those who have great credit scores, you don’t want to miss getting a loan for no good reason! Here are a few ways in which you can improve your chances of getting your application for a consolidation loan approved.
Make Sure You Fulfill All Eligibility Criteria
You need to ensure you are eligible for a loan with a lender before you apply. Some lenders don’t help people with fair credit scores like yourself. So, make sure what your credit score is and check whether you meet the lender’s minimum credit score requirement, for example.
Other lenders may not provide loans to borrowers who are not U.S. citizens or permanent residents where others only require a valid visa or work permit. It’s no use applying for consolidation loans for fair credit if you don’t fulfill the eligibility criteria.
Lower Your Debt-to-Income Ratio
Lenders want to know you are able to repay your loan. Especially since they take on more risk if you only have a fair credit score. So, lenders will look at the income you earn versus the debt you are required to repay monthly. This is called your debt-to-income ratio. A lower ratio will improve your chances of getting a loan.
Apply for Only Just Enough
Your credit score is enough to give you a chance of a loan with certain lenders. Don’t overplay your hand and apply for something beyond your means. Don’t add unnecessary pressure to your finances. A consolidation loan still has an interest rate and you still need to repay it. Consolidation loans for fair credit are not to be used for anything but your existing debt. Don’t apply for a loan that is more than the total of your outstanding balances.
Just because you have a fair credit score does not mean you have to continue dealing with the frustrations of mounting debt and interest payments. You have options, even with fair credit. And consolidation loans for fair credit is a great option, so, consolidate your debt and simplify your life today!