When determining your creditworthiness for bank debt consolidation loans most lenders will try to assess the “Three C’s” of your credit application. Those three “C’s” are capacity, collateral, and character.

Capacity

This component deals with your ability to actually pay debt back, taking into account your income and expenses. When looking at your income, banks will also look at the level of stability in what you make. In other words, a high income job that you only recently got or one that is largely based on commissions is not viewed as favorably as one that you have held for several years and is more salary based. An equally important part of this equation is your monthly expenses, with special attention paid to your debt to income ratio. If your debt load is considered excessive or extreme, qualifying for a loan may be difficult.

Collateral

This factor deals with the assets that you have to not only tie into the loan as guarantee of your payment, but also what you could potentially liquidate in the event your financial debt picture worsens due to some unforeseen event like loss of employment, a medical condition, or divorce.

Character

This aspect is concerned with not only your credit history, but also other factors like how long you’ve lived at the same address, had the same job, and other indications of your stability. An up and down lifestyle, late payments, and other indications of erratic behavior may be reason to deny you a loan.

All three of these factors are of heavy importance in getting approved for a loan, which is why it is mind-boggling that some consumers with high debt amounts refuse to accept a credit history impact of any sort in order to pay off their credit card balances. After all, having a high debt-to-income ratio in itself is grounds for not being eligible for a debt consolidation loan. So resisting a third party debt help service on the grounds that it will make you unlendable is illogical.

The real advantage of using a debt negotiation, debt settlement or credit counseling organization lies in the fact that you can save a large sum of money. Sure, some lenders will frown upon credit counseling and compare it Chapter 13 Bankruptcy, but if your interest can be cut in half, the savings potential will oftentimes make the sacrifice worth it. The same goes for debt settlement. If you could have your $60,000 in credit card debt reduced to $30,000, you could save more than $60,000 in interest alone versus paying the minimums (assuming a 16% interest rate).


High Credit Card Balance Questions

I have $60,000-$80,000 in credit card debt and other unsecured bills. How much would I have to pay in a debt settlement program?

Keep in mind that results to vary based on your individual circumstances. That being said, there have been cases where a person with $60,000-$80,000 in credit cards have been able to settle the total balances without fees for $20,000-$40,000 total.

What is the lowest possible settlement for $90,000-$100,000 in credit card debt with Bank of America?

Settlements in rare cases can be as low as 20% of the balance, which in this case would be $18,000-$20,000. They can also be as high as 80% of what you owe (or higher), which in this case would be just over $70,000-$80,000. To get a firm quote, fill out a form and PayingPaul.Com can refer you to a credit debt reduction company for a free quote.