Is LendingClub good for debt consolidation?

Personal loans affect your credit score in the short-term and in the long-term. In the short-term, a personal loan may damage your score because it causes a hard credit inquiry and increases your debt load. But in the long-term, a personal loan can either help or hurt your credit, depending largely on whether or not you pay the bills on time. Ultimately, it’s up to you how much impact the personal loan will have.... read full answer

How a Personal Loan Affects Your Credit Score:

• Does temporary damage with an initial hard inquiry. When you first apply for a personal loan, your credit score will immediately take a small hit. That’s because applying for a personal loan triggers a hard inquiry into your credit history. But this shouldn’t drop your score by more than 5 points or so, and you should be able to bounce back quickly.
• Adds to your overall debt. If you’re approved for a personal loan, you will immediately have a higher debt load, which may cause your credit score to drop in the short-term. That’s because the more debt you have, the riskier it is for banks and credit unions to lend to you.
• Reports to the major credit bureaus monthly. The banks, credit unions and online lenders that issue personal loans report payment information to the major credit bureaus on a monthly basis. If you make on-time payments, you can expect your score to increase. But if you are late or don’t pay altogether, your score will drop.
• Improves your credit mix. Proving yourself capable of managing multiple types of loans and lines of credit responsibly is good for your credit score. It shows you can be trusted to repay what you borrow in a variety of situations. So if you only have one or two other types of accounts on your credit report, such as credit cards or student loans, your score may benefit in the long run from getting the personal loan.
• Could help reduce credit utilization. Personal loans give you a lump sum up front, which you pay back in monthly installments. This is different from a credit card, where you can borrow up to a certain amount any time you want. Credit cards are known as “revolving credit,” and a big part of your credit score is how much of your revolving credit you use up each month, or your “credit utilization ratio.” Personal loans don’t count toward this ratio, so if you use them to pay off revolving debt, you can lower your ratio and improve your score.

In conclusion, as long as you’re sure to pay on time each month, a personal loan should eventually increase your score by a lot more than the initial inquiry caused it to fall. You can also avoid wasting hard inquiries by getting pre-qualified for a loan first. Pre-qualification only uses a harmless soft inquiry. And while it doesn’t guarantee approval, it will let you know if your odds are good.

Yes, you can get a LendingClub debt settlement. Like all lenders, LendingClub would prefer to have people pay what they owe in full. But there are a few sources and signs that make it clear LendingClub does settle debts sometimes.

The first is that LendingClub’s list of account statuses on their website includes one for the account being settled. Their FAQ also says that if an account is settled, LendingClub will report that to the credit bureaus. If that’s not enough evidence, there are plenty of anecdotal accounts from third-party sources that say LendingClub will settle.... read full answer

You most likely won’t be able to settle with LendingClub if you’re not already several months behind on your payments though. Settlement is an option that lenders typically agree to only when they realize their alternatives are not getting any money at all or taking you to court.

To settle your debt with LendingClub, first call LendingClub customer service at 1 (888) 596-3157. When connected with a representative, tell them you’re interested in debt settlement. Then, present a suggestion for a lump sum of what you are reasonably able to pay. This should be at least 30% of what you owe. Finally, listen to what the representative tells you for the next steps in the LendingClub debt settlement process.

Since LendingClub is a peer-to-peer lending site, they do not directly finance loans. They just facilitate the loans while various investors fund them. LendingClub will help you and the investors who funded your loan communicate to work out a settlement deal. According to the debt relief company CuraDebt, LendingClub sends out letters offering a final settlement deal with authorization from the investors who financed your loan.

You’re not obligated to accept any LendingClub debt settlement offer you don’t want. But keep in mind that if you continue to not pay your debt, there is a real chance you could be taken to court over it.