Managing business debt could prove to be a pretty challenging task. What if you are juggling numerous outstanding payments and loans? The challenge could become an unending cash flow nightmare. Experts believe that debt consolidation could help you resolve your financial issues and come out of the nightmare. Here are some of the key characteristics that are essential for qualifying as a good debt consolidation candidate.
- You Have Multiple Outstanding Loans
Debt consolidation is precisely for all those individuals, who are presently paying off multiple loans and are looking to combine all those loans into one compact loan with just one monthly payment.
- You Have High-Interest Loans Right Now
You are currently having loans with high interest rates and you are looking for a debt consolidation loan with a definitely lower rate of interest. Generally speaking, if your current loans have higher rates of interest, your chances of obtaining a relatively better interest rate by taking out a debt consolidation loan, are very high. However, the interest rate you would be qualified for is reliant on numerous factors. Most lenders would be looking at all aspects including the annual revenue, credit score, and even time in business.
- You Are Presently Having Short-Term Loans & Looking for Extending Your Payments
Are you having multiple short-term loans? Do you need some more time for paying them off? If you are able to qualify, you could consider consolidating your multiple short-term loans with a single multi-year term loan that could be helping you in extending those payments and improving the cash flow of your business. Browse through debt consolidation reviews.
- You Have a Very Good Credit Score
Whenever you are making a loan request to any financial institution, the loan approval would be depending on a good credit score of the borrower. Your credit score would be weighing heavily in the determination of the fact whether you would be qualifying for a lower interest rate debt consolidation loan. In this context, you may know if your rate of interest is already low, it would be pretty difficult to qualify for getting better loan products as compared to what you are already having.
Generally speaking, a credit score that is 700 or even more is regarded as excellent. Even if your credit score is 620 or more and you are operating a business for over a year, you would still stand some chances of getting some lower interest choices. If your precise credit score is less than 500, it is almost impossible to opt for refinancing or debt consolidation.
- Your Credit History Is an Important Factor
Lenders would be scrutinizing your credit history after examining your credit score. This information is important for lenders to get an idea of your financial layout, whether you have or have not defaulted on any of your loans and your payment history.
Total Loan Amount
Several debt consolidation services insist on a maximum and even a minimum amount of debt they would actually be consolidating. For example, a debt consolidation firm may not be willing to consolidate if the total sum of the debts seems to be less than $1,500. You must also note that the firm may not consolidate your debts if the amount exceeds a specified number.
Your Income Is a Key Factor
A lender would be very much interested to know about your overall financial condition. He would see if you are financially stable enough to take out a debt consolidation loan and make the payment on time every month. He would like to examine your annual salary, employment history, and duration of present employment. You must be ready to provide pay stubs, proof of employment, and rental history.
You are the best judge whether it makes any financial sense for you to take out a debt consolidation loan or not. Only you could be having a complete understanding of your finances including your expenses, current cash flow, future potential, and revenue. If you have done your research and have clearly understood the slightest details about all your existing debts and debt consolidation choices, you could make a decision that would be best for you or your business.