- 1). Make a list of all your debts, dividing the list into secured and unsecured. Secured debts are those which are guaranteed by property, such as a vehicle or home. Unsecured debts are those which are obtained without collateral, such as credit cards, medical bills, utility bills, etc. Make note of the outstanding balance for each type of debt and which accounts are past due.
- 2). Decide which debts you want to consolidate. If you're only approved for a certain amount through a consolidation loan, you may want to choose the debts with the highest balances and/or interest rates. If you're attempting to consolidate your loans through a debt management company, you may be required to have a certain balance to qualify for consolidation and you may only be able to consolidate unsecured debt. Also, be aware that some consolidation companies will not consolidate debts unless they are past due.
- 3). Pull your credit reports. You need to know what's on your credit report before applying for the loan so you can clear up any errors or negative information. Many consolidation loans require good credit. Although credit scores are not typically considered when consolidating debts through a consolidation company.
- 4). Decide what you will use as collateral if you choose a consolidation loan. This may by your home, vehicle, or other property that you have equity in. You may need to contact an appraiser or your local tax assessor to verify the value of the chosen collateral. If you have no collateral or anything of value to secure a loan, you will need to consider a debt consolidation company.
- 5). Provide proof of income and a copy of your budget. You must have regular income to qualify for a consolidation loan and consolidation companies most often will not work with you if you cannot provide proof of steady income. Most lenders will also want to see a copy of your budget, or at least a list of your monthly expenses to help them determine what type of payments you can afford.
- 6). Contact your lender to see if there are any additional criteria required to qualify for a loan. If you don't qualify for a secured or unsecured loan, look for an accredited debt consolidation company or speak with a certified credit counselor for more solutions.
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