How To Get A Debt Consolidation Loan With Fair Credit

How To Get A Debt Consolidation Loan With Fair Credit In Singapore

Written by 1AP Credit on February 24, 2023

A debt consolidation loan offers you a chance to make timely repayment of various loans at once and improve your credit score at a lower interest rate. But what are the chances when you have a fair credit score?

If you want to know how to get a debt consolidation loan with fair credit, you’re just at the right place.

Knowing how to get a debt consolidation loan with fair credit can make a huge difference in your finances in the long term.

This article considers the meaning, uses, dynamics and how to get a debt consolidation loan with fair credit.

What Is A Debt Consolidation Loan?

A debt consolidation loan combines all your existing loans into a single one.

This way, rather than pay multiple installments on different due dates, each with varying interest rates, you only have to make a single monthly payment at a much lower interest rate.

You would no longer have to keep track of different loan types across different financial institutions, deadlines and interest rates.

Since debt consolidation is a personal loan, taking another loan to service existing debts may seem counterintuitive.

However, this loan type serves to pay off multiple debts over a period while offering several benefits.

A debt consolidation loan may be an excellent option if you’re looking to pay your debts faster, reduce your monthly payments, simplify your budget, and increase your credit score over time.

Once you learn how to get a debt consolidation loan with fair credit, you get to enjoy these benefits even more.

In Singapore, you can opt for a debt consolidation plan (DCP) to consolidate all your unsecured credit facilities across different financial institutions with a single participating financial institution.

Such unsecured credit facilities include personal loans, credit lines and credit cards.

Keep in mind that DCP is an optional method to consolidate debts, and could often be mistaken with a standard debt consolidation loan.

DCP Vs Debt Consolidation Loan

A DCP is largely different from a debt consolidation loan.

In Singapore, only 14 financial institutions are empowered to provide DCP to Singapore citizens and permanent residents only.

But this is not the case in debt consolidation loans as banks and licensed money lenders are allowed to give debt consolidation loans, and foreigners are welcome to apply.

Under a DCP, the applicant must earn between $20,000 and below $120,000 per annum, and have a Net Personal Asset of less than $2 million.

What’s more, such individual’s total debt equivalent across all financial institutions must be up to 12 months of their monthly income.

There are no such eligibility requirements under a debt consolidation loan.

Finally, some categories of unsecured loans are not eligible for DCP, such as joint accounts, education loans, medical or business loans, renovation loans and business credit facilities. However, these may be eligible under a standard debt consolidation loan.

Let’s look at the five uses of debt consolidation plans.

5 Uses Of A Debt Consolidation Loan

As a citizen or foreigner learning how to get a debt consolidation loan with fair credit, here are five popular uses to take out this loan for.

They include:

Credit Card Loans

With many bills to cover, your credit card loans can snowball out of your control and breed interest rates you may not be able to keep up with. A recent report shows Singapore has a high rate of credit card debt, totalling $12.1 billion as of the last quarter of 2022.

Thankfully, credit card loans are unsecured, meaning you can consolidate such loans via a debt consolidation loan. This way, you can easily repay your loans and build a good credit score.

Student Loans

Maybe you’ve taken out a student loan or are just about to, but you also have a family to care for. In that case, paying your debts may seem like a lot of work, leaving you with bad or fair credit.

In Singapore, student loans are typically on the high side, and it doesn’t help if you don’t have a regular job to pay from.

In this case, a debt consolidation loan can help you pay your student loans jointly with other loans you may have.

And if in doubt about how to get a debt consolidation loan with fair credit, we have provided some helpful tips in the next section.

Joint Accounts

If you’ve taken out a loan with a partner who has been unable to keep up with their share of repayments, it’s best to check the situation with a lasting solution.

At 1AP Capital, we offer bespoke debt consolidation loans and expert financial advice to help you navigate this situation.

You don’t have to stay stranded thinking about how to get a debt consolidation loan with fair credit, just apply away.

Renovation Loans

One of the downsides of project management is the uncertainty of costs. This makes it problematic to stick to a budget when renovating, as expenditures sometimes exceed the projected costs.

In this case, you may have to borrow more money to get the project over with.

If this is your experience, you’re just at the right place. 1AP Capital offers debt consolidation loans that ease your loan repayment process.

Multiple Personal Loans

A debt consolidation plan is also available for persons with accumulated debts from urgent loans, bridging loans and payday loans.

It can be exhausting having multiple loans to pay and keep track of, and it always helps to bring all loans together in one place.

With 1AP Capital, you get to pay these loans easily and at a much lower interest than you would pay if you were paying each loan individually.

How To Get A Debt Consolidation Loan With Fair Credit

With fair credit, you may consider yourself unattractive to financial institutions that offer debt consolidation loans.

However, this may not be the case for you, provided you meet the individual requirements of each lending institution.

Knowing how to get a debt consolidation loan with fair credit offers you a great start in your financial journey.

Follow these steps to boost your chances of getting a debt consolidation loan with fair credit.

1. Study the specific requirements of every licensed money lender you’re prospecting, and narrow down your search. Once you meet their eligibility standards, you’re already one foot in the door.

2. Pay closer attention to their specific income requirements, terms and conditions and most importantly, credit score limits. Don’t hesitate to rule out lenders whose criteria would hurt your debt profile.

3. Generally, you’ll be required to submit certain documents such as the latest Credit Bureau Report, the latest credit card and unsecured credit loan statements and the latest income documents.

It would help to lay all your best cards on the table to boost your chances of getting a debt consolidation loan with fair credit. A good income profile, when supported by a fair credit score, can make all the difference.

4. Consider increasing your income, and pay off small debts. This can help boost your debt-to-income (DTI) ratio, which money lenders often use to assess your ability to repay your loans. The lower your DTI ratio, the more attractive your loan application to money lenders.

5. As a spin-off from the preceding step, a surge in your credit report over the course of a few weeks shows you’re a serious applicant and this improves your odds of getting a loan. You can submit such reports to create a recency bias that you’re now committed to repaying all loans, which is why you’re consolidating debts in the first place.

6. You can add a co-signer with a higher credit rating to improve your chances of getting a debt consolidation loan with fair credit. Note that the co-signer takes equal responsibility for the loan, meaning that a default on your part will affect their credit score as well.

Essentially, it doesn’t end at knowing how to get a debt consolidation loan with fair credit, you must be proactive in your application, as this shows you’re a serious applicant.

At 1AP Capital, we’re happy to receive your debt consolidation loan applications and offer you a personalised plan at moderate interest rates. Do not let fair credit deter you from trying.

Pros And Cons Of A Debt Consolidation Loan

A debt consolidation loan may or may not be your best choice. Don’t occupy your mind with learning how to get a debt consolidation loan with fair credit alone.

It would help to consider your financial situation, overall debts and credit score before signing up for one. Let’s consider the pros and cons.

Pros

It streamlines your repayments by tracking due dates and different debt profiles
It improves your credit as you can pay all loans once a month and at the agreed periods
It helps you reach a debt-free status faster if you stay committed to it

It offers a lower interest rate, thereby saving you money

Cons

It carries the risks of increased costs from added fees such as balance transfer fees and origination fees
You risk settling for money lenders with higher interest rates if you don’t find a lower rate for your credit score
You may end up paying more over an extended period

Where Can You Apply For A Debt Consolidation Loan?

You can approach any credit union, bank or licensed money lender for debt consolidation loans. They assess your income, credit score, spending habits and all factors to determine your chances of getting the loan.

Typically, money lenders like 1AP Capital are more lenient than banks, sometimes overlook your credit score, and are generally less rigid with the eligibility rules.

It’s not enough to learn how to get a debt consolidation loan with fair credit alone; it would help to know all the necessary information about the financial institutions you’re prospecting. Compare their fees, interest rates, and costs per loan over an extended period.

Once you’ve decided on a bank, credit union or money lender, visit their website and fill out the application form on the debt consolidation loans page. You may get feedback in 24 hours.