Q: We are looking to consolidate our debt. Our mortgage lender turned us down for a home equity line of credit, what are our other options? We have only been in our home for one and a half years so there is not much equity.

And, we have tried approval for other loans from the same lender and been denied. Should we try other lenders?

A: No. You’re done for the moment. Every time you apply for credit and are denied, you hurt your credit history and your credit score goes down. The lower your credit score, the less likely you will be approved by another lender.

If you’ve been turned down for a loan, you’re entitled to see a copy of your credit history and credit score to find out why they’ve turned you down. In your case, however, it sounds as though you’re trying to get blood from a stone.

If you don’t have any equity in your property, you cannot refinance in order to consolidate debt. Mortgage lenders are getting picky about how much cash you can borrow against your equity. These days, they’re not doing 100 percent loans, or anywhere close to that. If you’re in a declining market, where home prices are falling, they might not refinance you if you have less than 5 or even 10 percent equity in your home.

Since you’re out of refinancing options for the time being, if you want to get your debt under control, you’ll have to do it the old fashioned way: stop spending and find a way to bring in more income each month, even if it means taking a second or third job.

Published: Apr 24, 2008