Adam McCann, Financial Writer
To get a debt consolidation loan, you must be at least 18 years old and have a steady income as well as a credit score of at least 660. Not all debt consolidation loans will require a 660+ credit score, but it’s unlikely you’ll get rates that are worthwhile for consolidation with a lower score. People who meet the general requirements for a debt consolidation loan will find the process of getting approved to be pretty easy. It really comes down to comparing offers in order to find the right one for your specific needs.
Depending on the lender, you may be able to apply for a debt consolidation loan online, by phone or in person. You can expect to receive a decision within a few business days, if not instantly. Applicants typically receive their funds within 7 business days of being approved. Using those funds to pay off existing debts and consolidate what you owe can take another few days to a few weeks, depending on the lenders you owe and how you choose to pay them.
Now that you know the basics of getting a debt consolidation loan, it’s time to learn about the specifics of each step in the process.
How to Get a Debt Consolidation Loan
Compare personal loan offers
The most important factor when comparing personal loans is the APR. You’ll want the lowest rate possible to help you pay off your existing debts faster. However, you should also take into account how much each loan charges in fees, how much you’re able to borrow, and how long you can take to pay the loan off.
Identify lenders that work for your situation
Lenders have a minimum credit score that they require for approval – often 660. And unless you have good or excellent credit, you’re not likely to get rates that are worthwhile. In addition, not all lenders will allow you to consolidate all kinds of debt. For example, many don’t allow student loan consolidation, and some lenders specialize in only one type of consolidation (e.g. Payoff and credit cards).
Pre-qualification doesn’t guarantee approval, but it will give you a sense of how likely you are to be approved as well as what rates you might receive. If you want to pre-qualify for multiple lenders at once, rather than one at a time, you can use WalletHub’s pre-qualification tool.
Submit an application
After you settle on a debt consolidation loan offer with a low enough APR and a high enough loan amount, you can submit an application online. You may also be able to do it over the phone or in person. Make sure you fill out the application accurately and truthfully.
Wait for a decision and funding
Often, applicants for debt consolidation loans will receive a decision instantly. But that won’t always be the case. You should expect to wait around 7 business days for the entire decision and funding process to finish. Your wait could be shorter than that, or as long as a month, depending on the lender and your personal situation.
Once you receive your debt consolidation loan, you’ll use the money to pay off your creditors. From that point on, you’ll owe all of the debt to the company that issued the consolidation loan. Make sure to submit your monthly installments on time to ensure that the lender reports positive information to the credit bureaus each month.
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