By the time many people look at consolidation, the debt has already caused late payments. That makes banks hesitant, but it doesn’t rule consolidation out.
How lenders view it
- A few recent late payments on cards may be acceptable to some banks or credit unions if your mortgage is perfect and equity is strong.
- More serious or ongoing problems often point to alternative lenders, who are more flexible at a higher cost.
- Missed mortgage payments are the most serious and may need a private lender for a short term.
Why consolidation can help your credit
Paying off the debts that were causing late payments, and replacing them with one manageable payment, can stop the damage and start the recovery. See consolidation and your credit score.
What it costs
Alternative and private lenders charge higher rates and fees. Compare the total against what you’re paying now. See the math.
Plan the next step
Use the new mortgage term to rebuild, then move to a lower-cost lender at renewal. See consolidating at renewal.
Be honest about the cause
If the late payments came from income problems that haven’t been fixed, consolidation alone won’t solve them. See consolidation vs counselling vs a proposal.
This article is general information, not financial or legal advice. Lender requirements, rates and fees change and depend on your situation.