Having difficulty deciding whether to take help of a debt consolidation cosigner or not. Here are some points you need to take care.
Having a low credit score while planning to consolidate debt alongside a personal loan might lead to your lender requesting you to opt for a debt consolidation cosigner before the approval of your application. But the main question would be: Is it right to consider your family member or friend for financial debt help? Even If you decide on it, what would be the requirements from the lender’s side that could be asked from your debt cosigner?
Why you might require a cosigner for a debt consolidation loan
A debt consolidation loan is all about the convergence of multiple debts into a single fresh loan. It’s the decision of your consolidation lender which will depend on their willingness to lend you money so that you can pay down some of your debts.
1. Insufficient credit score
After looking through certain aspects, your consolidation lender might as well lend you the money. However, you are also expected to pay the money back. Lenders often rely on people who have a decent background of repaying the loan. If you have a bad credit score, then try acquiring credit assistance or opt for credit rebuilding to improve your chances.
2. Lack of income
Instability in income is yet another factor that leads the lenders to feel reluctant in offering you loan money. With insufficient income, there are lesser chances of you supporting those loan payments.
3. Too much debt
The lender could also deny your application if he feels that your total debt is too high to lend you that much amount of money. Because finally, it’s all about shifting of the debt and not precisely a debt relief situation. In such cases, you will see that even debt management services might feel hesitant to offer help.
How a cosigner can improve your loan application
A cosigner will offer the lender with a better credit history which might be precisely the thing that is lacking in your application. With information on income as well, the lender would certainly consider your application.
Key benefits of having a cosigner:
- Chances of your application approval increases.
- Significant interest relief and possible debt negotiation.
- Reduction in the amount of security deposit to be made.
- Provision of potential assets required.
Responsibilities of Loan Cosigner
A cosigner is a person who is responsible for your debt payment if you fail to do so. If you could not deposit the payments, then the lender will contact the cosigner. Further payments and time limit will depend on loan agreement terms.
Since the cosigner works on behalf of you, their credit score will also be affected. At the instance of your timely payments, it is the cosigner who will be contacted first by either a collection agency or lender.
Some Final Words
Credit720 has experts in debt consolidation who are experienced in handling debt-related situations like a pro. Contact them for professional financial advice!