To get a loan to refinance credit card debt, here are your next steps:
Evaluate your credit card debt and current APRs
Once you consolidate, you can’t undo it. It’s essential to make sure that consolidating will leave you in a better position than where you started.
First, grab your credit card statements. Then, tally up your total current debt. This figure represents the loan amount you should apply for.
Also, take note of your credit card APRs. Add them together and divide that number by the amount of cards you have. That will give you an average of how much interest you’re paying for your credit cards. You’ll need this to compare against your consolidation loan offers.
Check your credit score
Before pursuing a personal loan for debt consolidation, you should check your credit score with LendingTree Spring. If your score is below 680, a loan might have a higher APR than what you have on your cards.
Prequalify for multiple lenders
Personal loan requirements vary across lenders. A quick way to check your eligibility is to prequalify.
Prequalification only requires a soft credit pull, so it doesn’t affect your credit score. This process can give you an idea of how likely it is that a lender will approve you if you decide to apply.
Prequalifying for a handful of lenders may be wise. Otherwise, how will you know if you’re getting the most competitive rate?
When you’re comparing lenders, pay attention to APRs and origination fees. Also, look for lenders that offer a consolidation discount (such as SoFi).
Apply for your loan
Applying for a loan is like prequalification but more in depth.
The lender may ask for documents such as bank statements and a government-issued ID. Also, it will probably run a hard inquiry to review your credit report.
Some lenders can provide an approval decision within minutes. With others, it can take several days or even a week. If it approves you, you’ll sign a promissory note, or your loan’s contract.
Pay your creditors and enter repayment
Some lenders will pay your credit cards for you, but not all. If yours doesn’t, it’s imperative that you use your loan for its intended purpose — paying off your credit card debt.
About 30 to 45 days after the lender disburses your funds, you’ll begin paying off your loan.