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Can you get a debt consolidation loan with a 620 credit score?
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Over the past few years, inflation has driven up the cost of everything from housing to groceries, leading credit card usage to become an even more integral part of many Americans’ financial lives. With the higher costs of consumer goods stretching people’s budgets thin, many have turned to their credit cards as a way to cover the costs of essentials that they couldn’t otherwise afford.
That type of financial strategy may buy you some wiggle room in your budget, but it comes at a steep price, especially in today’s high-rate environment. Right now, the average credit card rate is sitting at a record high of nearly 23% and many cardholders have even heftier rates tied to their cards. In turn, it’s easy to accumulate substantial credit card debt if you aren’t paying off what you owe each month.
When you’re dealing with a serious financial issue like mounting credit card debt, it’s important to be proactive about the situation. One way to do that is to pursue debt consolidation, which involves combining multiple debts into a single loan, ideally with a lower interest rate. But for those with less-than-stellar credit scores, such as those with a 620 FICO score, a common question arises: Is debt consolidation still a viable option?
Find out what credit card debt relief options are available to you here.
Can you get a debt consolidation loan with a 620 credit score?
The short answer is yes, it is possible to obtain a debt consolidation loan with a credit score of 620. However, it’s important to understand that this score falls within the “fair” credit range, which may impact the terms and conditions of the loan you’re offered — and could limit the options available to you.
One issue is that a 620 credit score is generally considered to be on the lower end of what many lenders will accept for a debt consolidation loan. While you may be approved, you’re unlikely to qualify for the best interest rates or most favorable terms. That’s because lenders view applicants with lower credit scores as higher-risk borrowers and they tend to offset this perceived risk by charging higher interest rates or imposing stricter repayment terms.
That said, even if the interest rate on a debt consolidation loan is higher than what you might hope for, it could still be significantly lower than the rates on your existing credit card debt. Remember, with credit card interest rates averaging 23%, even a consolidation loan with a 15% APR could represent substantial savings.
Don’t wait any longer to tackle your credit card debt. Compare the debt relief options available to you now.
Other debt consolidation options with a low credit score
While it might be challenging to obtain a traditional debt consolidation loan with a credit score of 620, there are alternative options to consider, including:
Debt consolidation programs
Debt consolidation programs are generally offered by debt relief companies. Like traditional debt consolidation, these programs allow you to roll all of your credit card debts into one lump-sum loan, but the loan is typically issued by a partner lender of the debt relief service you’re working with. The primary advantage of this option is that these companies often have relationships with lenders who are more willing to work with borrowers with lower credit scores.
The rate you get through this type of consolidation program likely wouldn’t be as low as you would get if your credit score was higher or you were to be approved for a debt consolidation loan through other means. However, the loans offered by these programs will typically still have a lower interest rate than your credit cards, saving you money over time.
It’s important to note, though, that while these programs can be helpful, they may also have fees attached that make them more expensive than a traditional debt consolidation loan. However, for many people struggling with high-interest credit card debt, the long-term benefits often outweigh these considerations.
Balance transfer credit cards
Some credit card companies offer balance transfer cards with promotional 0% APR periods and this option could be available to those with fair credit. After all, there’s a wide range of card options to choose from, and each lender sets its requirements for approval. That said, the promotional period may be shorter and the transfer fee could be higher than what’s offered to those with excellent credit. However, this route could still provide substantial savings to the right type of borrower.
Debt management plans
Many credit counseling agencies offer debt management plans, which can benefit you by negotiating with your creditors to lower the interest rates and fees attached to your cards. These plans can also consolidate your payments into one monthly payment made to the agency, which then disburses the money to your creditors. Your credit score is typically less of a factor in qualifying for these plans, but you likely won’t get the same types of savings, either, as you’re not using a loan or credit card to lower your rate across the board.
The bottom line
While a 620 credit score may limit your options somewhat, it doesn’t necessarily preclude you from taking advantage of what debt consolidation can offer. The goal is to find a solution that lowers your overall interest rate, simplifies your payments and puts you on a clear path to becoming debt-free. So, by exploring your traditional consolidation options and the alternatives, you may be able to find a way to manage your credit card debt more effectively.
Police arrested a man on murder charges this month, 14 years after he allegedly killed a man in Virginia, but the victim’s body has never been found.
Shane Ryan Donahue, a Virginia man, is presumed deceased, the Prince William County Police Department said Tuesday. He was last seen leaving his parents’ home in Nokesville, Virginia, on March 22, 2010. Donahue, 23, was headed to his house in Nokesville, but never made it there.
Donahue was added to the National Missing and Unidentified Persons System after he vanished. According to records, Donahue did not have a car and regularly got rides from friends. He frequented Washington, D.C., Baltimore, Fauquier County, Virginia, and Northern Virginia.
The case stumped investigators, who followed a number of leads over the years. This spring, detectives reactivated the investigation and started looking at every detail of the case from scratch, officials said. They revisited people who had been interviewed during the initial investigation and reviewed “digital evidence in greater detail due to advances in analytical technology and modern police investigative practices,” according to a news release.
Officers said Donahue was last seen leaving his parents’ home with Timothy Sean Hickerson, now a 43-year-old Florida resident. Investigators connected Hickerson to a burglary at Donahue’s home that happened just days before the Virginia man disappeared.
Detectives got an arrest warrant this month and, with the help of Florida’s Flagler County Sheriff’s Office, Hickerson was taken into custody in Palm Coast, Florida. Hickerson was charged with murder and burglary, is now set to be extradited to Virginia.
Former President Donald Trump, an avowed proponent of tax cuts, is floating the idea of reversing a measure passed during his tenure in the White House that effectively raised taxes for many U.S. homeowners.
In a post Tuesday on Truth Social, Trump suggested he would scrap a $10,000 cap on deducting state and local taxes (SALT) that was passed as part of the 2017 Tax Cuts and Jobs Act — a massive revamp that he has said boosted economic growth.
Now, in the run-up to the November election, Trump said in the post he would “get SALT back, lower your taxes, and so much more,” although he stopped short of offering details. Trump made the post ahead of a speech he’s giving Wednesday at the Nassau Coliseum on Long Island.
Trump’s new proposal for getting rid of his $10,000 SALT deduction cap comes as the presidential hopeful is pitching several additional tax cuts that would, if enacted, reduce taxes for major groups of voters. He’s also vowed to eliminate taxes on Social Security benefits, a pledge that could get support from the nation’s senior citizens, as well as to end income taxes on tipped workers and on overtime pay, ideas that would help lower- and middle-income Americans.
Yet Trump’s reversal on the SALT deduction has sparked skepticism from lawmakers as well as economists and policy experts.
“So … now Trump is against the SALT tax cap which *checks notes* is a key part of the — only — major piece of legislation passed during his administration?” noted Chris Koski, a political science professor at Reed College in Portland, Oregon, on X.
Rep. Tom Suozzi, a Democrat from Nassau, Queens, said in a statement on Wednesday that he is “happy that the former president is saying that he has finally reversed his devastating decision in 2017 to cap the State and Local Tax (SALT) deduction.” He also urged Trump to convince Republican lawmakers to vote to restore the full deduction “if he is truly serious.”
The SALT deduction cap “has been a body blow to my constituents for the past 7 years,” Suozzi added.
Senator Chuck Schumer, a Democrat from New York, wrote on X,”Donald Trump took away your SALT dedications and hurt so many Long Island families. Now, he’s coming to Long Island to pretend he supports SALT. It won’t work.”
Asked for details about Trump’s proposal to restore the SALT writeoff, a spokeswoman for the Trump campaign told CBS MoneyWatch: “While his pro-growth, pro-energy policies will make life affordable again, President Trump is also going to quickly move tax relief for working people and seniors.”
Here’s what to know about the SALT deduction.
What is the SALT deduction?
The state and local tax deduction allows taxpayers who itemize to deduct property taxes, sales taxes and state or local income taxes from their federal income taxes. Prior to the Tax Cuts and Jobs Act, there was no limit on how much people could deduct through the SALT deduction.
But the 2017 tax overhaul passed under Trump limited the deduction to $10,000 – a blow to many homeowners in states with high property taxes, many of which are Democratic leaning. At the time of the law’s passage, the Treasury Department estimated that almost 11 million taxpayers in high-tax states like New York and New Jersey would forfeit $323 billion in deductions.
Who benefits from the SALT deduction?
Homeowners with high property taxes, such as people in New York, New Jersey and California, were the biggest beneficiaries of the the full SALT deduction.
But some experts also noted that the SALT deduction primarily put more money in the pockets of higher-earning Americans. About 80% of the full SALT deduction had helped people earning more than $100,000 a year, according to the Tax Foundation.
What happened after Trump capped the SALT deduction at $10,000?
The limit has increasingly impacted middle-class homeowners across the U.S. because of rising property taxes and incomes. Some lawmakers have also sought to either repeal or increase the SALT cap, but none of those efforts have borne fruit.
Earlier this year, some lawmakers sought to double the SALT deduction cap to $20,000 for married couples, with the change retroactive for the 2023 tax year. But that bill was blocked in the House in February.
Won’t the SALT deduction cap expire anyway?
Yes, the SALT deduction cap is a provision that’s due to expire in 2025, as are many other parts of the Tax Cuts and Jobs Act, such as a reduction of the individual tax brackets. But Trump has previously indicated he wants to extend the provisions in his signature tax law.
How much would it cost the U.S. to repeal the SALT deduction cap?
It won’t be cheap, according to the the Committee for a Responsible Federal Budget, a think tank that focuses on budget and policy issues.
Eliminating the $10,000 deduction limit “would increase the cost of extending the 2017 Tax Cuts and Jobs Act (TCJA) by $1.2 trillion over a decade,” the group estimates, adding that such a measure would be a “costly mistake.”
Extending the TCJA’s tax cuts would increase the nation’s deficit by $3.9 trillion over the next decade, the group estimates. By adding in a expiration or repeal of the SALT deduction cap, that would grow to $5.1 trillion, it added.
“Lawmakers should not extend the TCJA without a plan to – at a minimum – offset the costs of extension, but ideally the plan would raise revenues relative to current law and help put the nation’s debt on a better trajectory,” the group said in a statement.
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