Can I apply for a loan with credit card debt?

Yes, you can apply for a loan with credit card debt. However, it may be harder to get approved. Lenders look at your finances, and high credit card debt could affect your chances of success.

How does credit card debt affect my loan application?

Credit card debt can impact your loan application. Lenders look at how much debt you have and how you manage it. If you make payments on time and lower your balance, it may look good on your application. However, if it looks like you will struggle to make payments, your application could be declined.

How else do lenders assess loan eligibility?

Lenders consider factors like income stability, employment history, and your overall financial health. They also review your debt-to-income ratio and credit score. According to Experian, being on the electoral roll can help lenders verify your identity and improve your chances of getting a loan.

How can I improve my chances of getting a loan?

We have listed some ways of improving your chances of getting a loan below. 

Repay your debt

Clear your credit card debt to lower your debt-to-income ratio and improve your credit score.

Lower credit utilisation  

Pay down as much as possible, aiming to not use your credit card often.

Close unused cards

Close unused credit cards so you are keeping your credit utilisation rate low.

Improve your credit score

Pay bills on time and decrease existing debts. You can check your credit report with Experian, Equifax, or TransUnion to find areas for improvement.

Register to vote

According to Experian, being on the electoral register can improve your credit score by up to 50 points and helps lenders confirm your identity.

Keep up with bill payments

Avoid missed payments, as these can significantly impact your credit score. Set up direct debits to make sure you make your payments on time.

Correct credit report errors

Check for and fix any mistakes in your credit report to prevent this from affecting your score.

Remove old financial links

If you have joint financial products with someone with poor credit, close those accounts.

Limit credit applications

Avoid multiple credit applications before applying for a loan, as these may temporarily lower your credit score.

Summary

Applying for a loan with credit card debt may be difficult, as it affects how lenders assess your affordability and eligibility. However, going through a specialist lender like us can offer you more flexibility when applying for a loan.

To manage high credit card debt, it is important to be in control of your finances. By paying down debt and improving your credit score, this may improve your chances. To improve your eligibility to getting a loan, consider reducing debt and lowering your credit utilisation.

At Central Trust, we take a holistic approach when assessing your applications. Whether you have had credit issues in the past such as defaults and CCJs, we could help. Call our free telephone number in the top right of the screen to get in touch with one of our friendly advisors. They will support you through your application process from start to finish, even if you have credit card debt.

If you are thinking of consolidating existing borrowing you should be aware that if you are extending the term of the debt you may be increasing the total amount you repay. All loans are subject to status, and appropriate lending terms.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.