Loans can be lifesavers if you need money urgently. But when multiple debts accumulate over time, it’s not only difficult to manage them but also to clear them. That’s where a debt consolidation loan comes in.
Debt consolidation is a great way to reduce the number of payments you make monthly, simplify your debt management, and build a better financial future.
However, if you have a fair credit score, getting a debt consolidation loan is difficult, but not impossible.
This article helps you to understand how to get a debt consolidation loan with fair credit.
What Is A Debt Consolidation Loan?
A debt consolidation loan is a form of financing that pays off multiple debts and combines them into one loan.
By combining all your existing loans into one, you are able to reduce the interest rate significantly and conveniently structure your repayment schedule according to your financial needs.
This way, you don’t have stray repayments occupying vast amounts of your budget that you might miss. You get to manage timely payments at favourable rates – leaving more room in your wallet while giving you peace of mind.
5 Uses Of A Debt Consolidation Loan
If you already know your credit score isn’t good, knowing how to get a debt consolidation loan with fair credit can be the first step to a better financial life.
Here are five ways a consolidate debt loan can help you.
1. Pay Off Unsecured Debts
Credit card debts can pile up quickly and become hard to manage. When you consolidate a loan, you can pay off the entire balance on unsecured debts such as credit cards.
This helps you get out of debt as soon as possible. Debt consolidation loans can also be used for wedding loans, payday loans, or emergency loans.
2. Reduces The Possibility Of Missing Payments
If you have multiple loans with different interest rates, you can consolidate them into one loan to make the payments more manageable.
This reduces the chances of you missing payments and having to pay late fees as a result.
3. Get Lower Interest Rates
By taking loans for consolidating debt, you can qualify for a lower interest rate, which can save you money in the long run.
4. Improves Your Credit Score
When you consolidate a loan, you get a chance to improve your credit score. If you have a fair credit score, this can be a great way to improve your credit and take control of your finances.
5. Reduces Your Stress
Struggling with managing multiple debts can take a toll on you mentally. Loans to consolidate debt can reduce the stress associated with multiple debts.
How To Get A Debt Consolidation Loan With Fair Credit
While a good credit score can give you access to better interest rates, it is possible to get a debt consolidation loan even with fair credit.
However, the first step to getting a consolidation loan is to analyse your current credit score.
If your credit score is not as good as it should be, make sure to take the necessary steps to improve your score.
Here are a few steps you can take to improve your credit score to get a debt consolidation loan with fair credit:
- Pay your bills on time: Make sure to never miss a payment
- Control how much credit you are using: Don’t exceed more than 30% of the available credit limit
- Check all three major credit bureaus regularly: Check for any errors and dispute them immediately
- Reduce the number of credit applications you make: Too many applications can affect your credit score negatively
Once you have taken the necessary steps to improve your credit score, it is time to start looking for debt consolidation loans with fair credit.
You can approach banks or licensed money lenders like CreditMaster that specialise in helping individuals clear their debts even with a fair credit score.
Debt Consolidation Loan Vs DCP
When looking at how to get a debt consolidation loan with fair credit, it is important to understand how it differs from a debt consolidation plan (DCP) in Singapore.
A DCP is an arrangement between you and your creditor that allows you to pay off your debts over a period of time.
A debt consolidation plan Singapore is available for those with inadequate resources and financial difficulties, and is typically longer in duration than a debt consolidation loan.
A debt consolidation loan, on the other hand, offers more flexibility as it can be customised according to how much you need and how long you need it.
Pros Of A Debt Consolidation Loan Singapore
- Can manage multiple debts with one loan
- Lower interest rates
- Can help to improve your credit score
- Easier to pay off debt faster
- Easy to track financial payments
Cons of Debt Consolidation Loan Singapore
- May have additional costs
- Will not solve bad spending or repayment habits
- If you do not qualify for a low-interest loan, you may be at risk of incurring more costs
- If missed payments or defaults occur, you may incur penalty fees or additional interest charges
Where And How To Apply For A Debt Consolidation Loan Singapore
When considering how to get a debt consolidation loan with fair credit, it is important to know where and how to apply.
Most banks and financial institutions in Singapore offer debt consolidation plans. You can get debt consolidation loans from licensed money lenders.
It is best to compare different lenders’ offerings before making a decision. If you donn’t qualify for a DCP, you can find money lenders that provide personal loans for debt consolidation at competitive rates.
In order to apply for a loan, most lenders will require you to provide documents including identity proof, income proof (payslips, bank statements), and your latest credit bureau report.
Getting a debt consolidation loan with fair credit can be difficult, but with careful research and comparison, you can find the best deal for your needs.
Get debt consolidation loans at competitive rates from CreditMaster, one of the top licensed money lenders in Singapore.
Contact us now or apply for a loan with us today.
Frequently Asked Questions
Who Can Apply For A Debt Consolidation Plan?
To qualify for a debt consolidation plan in Singapore, you must:
- Be a Singapore citizen or permanent resident
- Have a net annual income ranging from $20,000 to $120,000
- Have outstanding debt that is 12 times your monthly salary
- Have personal net assets that are less than $2 million
You can get a DCP from:
- American Express International, Inc.
- Bank of China Limited Singapore
- CIMB Bank Berhad
- Citibank Singapore Limited
- DBS Bank Ltd
- Diners Club Singapore Pte Ltd
- HL Bank
- HSBC Bank (Singapore) Limited
- Industrial and Commercial Bank of China Limited
- Standard Chartered Bank (Singapore) Limited
- Maybank Singapore Limited
- Oversea-Chinese Banking Corporation Limited
- RHB Bank Berhad
- United Overseas Bank Limited
Does A Debt Consolidation Loan Affect My Credit Score?
A debt consolidation loan does not have an immediate impact on your credit score. However, how you manage the loan repayment in terms of timely repayments and defaulting can affect your credit score positively or negatively.
What Types Of Loans Can’t Be Consolidated With A Debt Consolidation Plan?
Student loans, education loans, car loans, renovation loans, joint account loans, medical loans, and business credits are not eligible for debt consolidation plans.
What Happens If I Can’t Make The Repayments On My Debt Consolidation Loan?
If you cannot make the required payments, it is important to contact your lender immediately so that an alternative payment plan can be worked out.
