You must have a provable source of income in order to qualify for a debt consolidation loan. Banks and Credit Unions will want to see proof that you can service the debt, so you will need to supply at least one year’s tax returns and current pay stubs when you meet with the financial institution’s loan officer. Your banker may also ask to see a list of your current monthly expenses and payments, to ensure that you can make the monthly payment generated by the consolidation loan.
If your credit rating is low, especially if you have been missing payments on existing loans and utility bills, you may not qualify for a consolidation loan. In these circumstances, it is possible to use your home equity or car as collateral. The bank may also ask you to supply a co-signer who will take responsibility for the loan if you miss any monthly payments.
If you have been declined for a consolidation loan, it is worth it to ask the loans officer why. If you were just a few points short of qualifying, a small increase in your income or minor reduction in your debt load may make the numbers work so that you can apply again in six months.
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