Can bounced checks prevent you from qualifying for debt consolidation?
A lot of people have made financial mistakes, but one of the most annoying and expensive mistakes is bouncing a check. Overdrawing a checking account is also one of the most common mistakes that people make; over half of all Americans have bounced a check at one time or another. Every time a person does this, however, the bank gets to collect. A bounced check can bring a bank an average of $35 per incident. In addition to that fee, though, you also have to pay fees to the company you were supposed to pay and suffer a hit on your credit report.
Because a bounced check lower a person’s credit score, many people with multiple incidents assume that they will not qualify for a debt consolidation loan. The truth is that these loans work differently than other types of credit. Because the application and approval process is different, it’s possible for a person with a history of returned debits and bounced checks to qualify for a debt consolidation loan.
What does Debt Consolidation Require?
A debt consolidation loan requires everyone applying to go through the process of debt counseling. During this process, a person will work with a financial professional to review their budget, debt load, and the factors that contribute to their most frequent mistakes. Going through this process can improve a lot of different parts of a person’s overall financial situation, making them much more likely to pay their bills and meet their minimum debt payments. Banks that offer debt consolidation loans are aware that success rates with debt are higher when people go through the debt counseling process, making them much more likely to repay the loan.
The debt counseling process lets the bank know that you are a good credit risk despite the fact that you may have some mistakes on your credit report. As an added bonus, if you are able to make on time payments with your new debt consolidation loan for several months, you might see a significant improvement in your credit score. Having fewer bills to keep track of will also lower the risk of you bouncing other checks in the future. You’ll be taking the first step in getting your money under control.