A: There are a variety of factors that lenders may look at when determining credit worthiness for a loan, one of those is your credit score. Depending on the creditor’s lending guidelines, they may also look at your income, the amount and type of credit that you currently have, etc. With the current economic conditions, credit is becoming much more difficult to obtain.
In general, it is not recommended that you try to “borrow” your way out of debt. As a credit counselor, I hear stories everyday from clients that have attempted to do so. Frequently people will pay off the old credit card debts leaving their credit cards open for use again. Then people find themselves making payments on the consolidation but also additional new debt! There are other dangers with borrowing your way out of debt as well; adding another line of credit to your credit report may further decrease your credit score and the interest charged on debt consolidation loans is typically high so you end up repaying even more in interest.
There may be another solution! Have you considered a Debt Management Plan? With a Debt Management Plan your monthly payments and interest may be much lower than you are currently paying, the entire debt will be paid off quickly (usually within a 3-5 year timeframe), and there is no requirement for a certain credit score or need to meet other lending requirements!
For additional information about Debt Management plans, see About Counseling on our website.
By Steve Axtell