How to Borrow Money With a High Debt Ratio

A high debt ratio could indicate that you are a credit risk as creditors fear that you are taking on more debt than you can afford. As a high-risk borrower you may find borrowing money difficult. Or you may find that loans are available but at very high interest rates. MSN Money reports that creditors like to see people using only a small amount of their available credit -- no more than 30 percent.

Instructions

1

Get a copy of your credit report from AnnualCreditReport.com -- a website authorized by the Federal Trade Commission to offer free credit reports under the terms of the Fair Credit Reporting Act. View and print your report from the website's home page. Order your credit score separately, for a fee, by following instructions on the credit report.

2

Review the report for other negative entries in addition to your high credit balances. A high debt ratio may not disqualify you from loans if everything else on your report is in order. However, lots of late payments or accounts sent to debt collectors could make borrowing money even more difficult.

3

Make payments to bring all open accounts current and also make payment arrangements on any old, delinquent accounts appearing on your report. Write to current credits and emphasize the length of your relationship with them and your loyalty as customer. Ask that the creditors, based on your loyalty, remove one or more late payments from your credit report. Clearing delinquent items from your credit report could help your credit score improve and qualify you for a more attractive interest rate.

4

Meet with a nonprofit credit counselor such as those associated with Consumer Credit Counseling Service. Ask the counselor to review your credit report and high debt ratio. Then ask the counselor to offer referrals for local lenders who may be comfortable lending to high-risk borrowers.

5

Apply for a loan at your bank or credit union. Even with your high debt ratio your current bank may be willing to lend to you and some credit unions have lending policies that are more flexible than banks. If you are turned down, apply at a lending institution recommended by your credit counselor.