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

Credit & Debt Management

31/1/23

7 minutes read

By: Joey Chong

Are you considering debt consolidation but do not have a stellar credit score?

While it’s true that getting a debt consolidation loan with fair credit in Singapore can be challenging, there are options available. Lenders such as credit unions, and licensed money lenders specialise in debt consolidation loans.

A secured loan, such as a home equity loan, may also be an option. Having a co-signer can also increase your chances of approval.

However, it’s crucial to have a plan to address the underlying causes of your debts and be prepared for a higher interest rate due to your fair credit.

You can consult a financial advisor for advice, but it helps to have more knowledge about debt consolidation first. Find out how to get a debt consolidation loan with fair credit in this article.

Table of Contents

What Is A Debt Consolidation Loan?

A debt consolidation loan combines multiple outstanding debts into a single, larger loan.

The purpose of a debt consolidation loan is to make it easier for you to manage your debts. It reduces the number of payments you have to make each month and lowers the overall interest rate.

The loan can be secured or unsecured. The former is typically secured by your assets such as your property, and is used to pay off credit card balances, medical bills, or personal loans. The latter works like a personal loan.

You then make a single monthly payment to the lender, rather than multiple payments to different creditors. When you consolidate a loan, it makes managing your debts easier and saves you money on interest charges over time.

5 Uses Of A Debt Consolidation Loan

As mentioned, a debt consolidation loan helps you pay off multiple loans. It can also lower your monthly payments. Here are some ways that you can use a debt consolidation loan to make things easier on yourself:

Pay off high-interest credit cards: Loans to consolidate debt are designed to help you pay off your high-interest credit cards and other debts. Credit cards tend to have higher interest rates than personal or business loans, so you can save money by paying lower interest rates on your new loan.
Consolidate multiple debts into one: If you have multiple lines of credit with different interest rates, a debt consolidation loan can help reduce the amount of money you’re spending on interest payments every month – while still giving you access to the funds when necessary.
Improve your credit score: By consolidating multiple debts into a single loan, you can also raise your credit score when you make timely repayments.
Lower monthly payments: A debt consolidation loan can also lower your monthly payments when you opt for a longer loan term.
Obtain a lower interest rate: The loan can help you obtain a lower interest rate for your debts.

How To Get A Debt Consolidation Loan With Fair Credit

So do you know how to get a debt consolidation loan with fair credit?

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Obtaining a debt consolidation loan with fair credit can be more challenging than if you had excellent credit, but it is still possible.

Here are some steps you can take to increase your chances of getting approved for a debt consolidation loan with fair credit:

Review your credit report: Before applying for a loan, it’s important to review your credit report to check for errors and identify areas where you can improve your credit score.
Shop around for lenders: Not all lenders have the same lending criteria, so it’s crucial to shop around for a lender that is willing to extend a consolidate debt loan to you despite your fair credit. You can check with credit unions, and lenders specialising in debt consolidation loans.
Provide documentation: When you apply for a loan, be prepared to provide documents such as your proof of income, bank statements, and a list of your debts and creditors. This will help the lender assess your ability to repay the loan.
Consider getting a secured loan: A secured loan, such as a personal loan from trusted agents like BST Credit, may be easier to obtain if you have fair credit. This type of loan is secured by collateral such as your home, which reduces the risk for the lender considerably.

Debt Consolidation Loan Vs DCP

Debt consolidation loans and debt consolidation plans (DCPs) are two different ways to manage multiple outstanding debts.

A debt consolidation loan combines multiple debts into a single loan with a lower interest rate, making it more manageable to repay. You can get such loans from licensed money lenders.

On the other hand, a DCP is only offered by banks and financial institutions, and have fairly strict criteria. To qualify for it, you have to:

Be a Singaporean or a permanent resident (PR) of Singapore
Earn between $20,000 to $120,000 annually
Have outstanding debt that is at least 12 times more than your monthly salary
Have personal net assets that are less than $2 million

A debt consolidation plan can only be used for some types of unsecured loans such as:

Credit lines
Credit card debts
Personal loans

But a DCP excludes unsecured loans such as:

Student loans
Education loans
Car loans
Renovation loans
Joint account loans
Medical loans
Business credits

You can get a DCP from the following financial institutions:

The above qualifying criteria are strictly for the following financial institutions offering DCPs:

American Express International, Inc.
Bank of China Limited Singapore
CIMB Bank Berhad
Citibank Singapore Limited
DBS Bank Ltd
Diners Club Singapore Pte Ltd
HL Bank
HSBC Bank (Singapore) Limited
Industrial and Commercial Bank of China Limited
Standard Chartered Bank (Singapore) Limited
Maybank Singapore Limited
Oversea-Chinese Banking Corporation Limited
RHB Bank Berhad
United Overseas Bank Limited

In contrast, when you take a loan to consolidate debt from a licensed money lender, there might be no restrictions on the types of unsecured loan you can consolidate.

Pros And Cons

While a debt consolidation loan Singapore can assist you in managing your debts better, do weigh the pros and cons before you take out such a loan.

Pros

Consolidates all your debts in one loan, so you can pay off one debts consolidation loan instead of several.
You can get lower interest rates on your debt consolidation loan in Singapore than you’d get if you tried to pay off each of the debts individually.
Debt consolidation loans make it easy to keep track of your debts by offering one single monthly payment. This way, you won’t be charged for late payments.

You can save money on interest by consolidating your debt into one loan with a lower interest rate.

Cons

You’ll need to have good credit to qualify for a debt consolidation loan.
A debt consolidation loan won’t change poor spending habits.

Where And How To Get A Debt Consolidation Loan With Fair Credit

When you have a fair credit score, it shouldn’t be too hard to get a loan consolidation. There are plenty of lending options that can help you pay off your debt and get back on track, such as licensed money lenders.

But before you jump into applying for one, it’s important to know exactly where and how to get a debt consolidation loan with fair credit.

Here are the steps:

1. Find your preferred lender
2. Choose the best consolidated loan Singapore for your situation
3. Apply online or in person at an office near you
4. Receive approval within 24 hours after the application
5. Get the funds disbursed to your bank account

Get Your Debt Consolidation Loan Today

Debt consolidation loans are designed to help you pay off your existing debts, and consolidate them into one loan.

To know how to get a debt consolidation loan with fair credit in Singapore, you should do your research and find out more about the eligibility criteria.

If you need help, visit BST Credit today to learn more about a debt consolidation loan. Contact us or apply for a loan with us now.

Joey Chong

Joey loves asking questions about why things work the way they do. This trait has served her well. During her decade-long career as a media strategist, she discovered she had a knack for writing and design and continues to employ that to her advantage. She loves watching horror movies on Netflix.