Credit & Debt
Two questions sit at the center of borrowing: how a lender will see you, and what to do about the balances you already carry. These guides cover both — building and reading your credit, and comparing consolidation, counseling and settlement without the spin.
Start here if: You want to see yourself the way a lender will, or you're carrying balances you'd like to simplify.
What Lenders Actually Look At When You Apply
A lender reads your application for a handful of specific things. See them the way an underwriter does and you can fix the weak spots before you apply.
The credit & debt guides, in a sensible order
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Explainer
What Lenders Actually Look At When You Apply
A lender reads your application for a handful of specific things. See them the way an underwriter does and you can fix the weak spots before you apply.
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Step by step
Building Credit From Scratch: A First File That Grows
A thin or empty credit file is a starting point, not a verdict. Three kinds of account can open one, and two habits carry it from there.
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Explainer
Prequalified, Preapproved, Approved: What Each One Really Means
The three words arrive sounding identical and mean very different things. One is a guess, one is conditional, one is real money.
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Step by step
Turned Down for a Loan? A Calm, Step-by-Step Plan
The lender owes you the reason in writing. That notice is a repair list — work it in order and your next application reads from a stronger file.
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Worked example
Does Debt Consolidation Actually Save You Money?
A consolidation loan only pays off when the rate falls and the term stays short. Here is how to read both numbers before you sign.
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Comparison
Balance Transfer or Consolidation Loan? How to Choose
Both fold your card balances into one payment. The pick comes down to one honest number — how many months you need to be done.
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Decision guide
Consolidation, Counseling, or Settlement? Four Routes Out of Debt
They share a sales pitch and almost nothing else. Here is how the four routes split on cost, credit and taxes — ranked by how much they can hurt.
Questions people ask about credit & debt
What do lenders look at most?
Usually your credit history and score, your income and employment, your existing debt relative to income, and the amount and purpose of the loan. The full list.
How do I build credit if I have none?
A secured card, a credit-builder loan, or being added as an authorized user can start a file. On-time payments and low balances do most of the work from there. Where to start.
Does consolidating debt save money?
Only if the new loan’s APR is lower than what you’re paying now and you don’t stretch the term so far that the extra months of interest cancel the savings. See the worked example.
Is debt settlement the same as consolidation?
No. Consolidation pays your debts in full with one new loan. Settlement tries to get creditors to accept less than you owe, which can hurt your credit, be taxable, and isn’t guaranteed. Compare the routes.
- Comparison
Debt Consolidation ComparerList your current balances, rates and payments, then compare them with a single consolidation loan by total cost, not just the monthly payment.
- Checklist
Loan Application ChecklistA guided checklist of what to gather and check before you apply, so a lender sees you at your best and you avoid needless hard inquiries.
- Worksheet
Offer Comparison WorksheetEnter two or three offers and compare them by APR, total of payments, fees and term, so the headline rate can't hide a longer or costlier loan.
- Credit score
- A number, often 300 to 850, that summarizes your credit report to predict repayment risk. Higher scores usually mean lower rates. FICO and VantageScore are the common models.
- Credit report
- A record of your borrowing and payment history kept by the three nationwide bureaus. You can get it free weekly at AnnualCreditReport.com and should dispute any errors.
- Hard inquiry
- A lender's check of your credit when you formally apply. It can lower your score a little and shows on your report for up to two years; many within a short rate-shopping window often count as one.
- Soft inquiry
- A credit check that doesn't affect your score, such as a prequalification or your own review. Only you see most soft inquiries.
- Debt-to-income ratio (DTI)
- Your monthly debt payments divided by your gross monthly income, as a percentage. Lenders use it to judge whether you can take on a new payment; lower is generally better.
- Preapproval
- A more thorough conditional offer after a lender reviews more of your information, sometimes with a hard inquiry. Stronger than prequalification but still not final approval.
- AnnualCreditReport.com
The only federally authorized site for free credit reports from the three nationwide bureaus.
- CFPB: Credit reports and scores
How credit reports and scores work and how to dispute errors.
- NFCC: Nonprofit credit counseling
The National Foundation for Credit Counseling, a network of nonprofit counseling agencies.
- FTC: Coping with debt
The FTC's guide to your options and your rights when you owe money.