Debt consolidation loans for bad credit

If you’re juggling a number of debts, you may want to consider checking if a debt consolidation loan might help you to manage these better. By merging various debts into one loan it may be easier for you to keep track of what you owe.

Can you get a loan to consolidate debts if you have a bad credit score?

If you’re already in debt, you may struggle to get a standard loan (for example, if you have a lot of debt or have missed payments). Bad credit loans can incur higher interest rates, which could contribute to the debt that you already owe to lenders.

Lenders will want to see that you can demonstrate adequate credit hygiene. They’ll usually look at a variety of factors before deciding whether to lend to you. These can include your credit score as well as other information that they hold about you, such as your income. Generally speaking, the lower your score, the higher of a risk you’ll pose to lenders, whereas the higher your score, the more likely you’ll be seen as being able to make your repayments.

Can I get free debt consolidation?

You may come across ‘free’ debt consolidation services, but these could involve hidden costs. For example, the interest charges might be higher than those charged by paid debt consolidation services.

There also used to be debt management companies that misled consumers by advertising ‘government debt consolidation loans’, when in fact individuals could get free debt management services from charities instead. The Financial Conduct Authority (FCA) took action to stop some of these companies, and regulates the sector, but you should be aware of the potential risks when researching debt consolidation companies. You may find it useful to get impartial advice from debt charities like StepChange and National Debtline.

Will getting a debt consolidation loan affect my credit score?

The credit score that the lender uses to assess your creditworthiness is not necessarily the credit scores provided by credit reference agencies (CRAs). There is no one universal score, and different lenders and CRAs use different ways to calculate the scores that they provide. Generally, applying for too many loans at once (debt consolidation loans in this case) could hurt your credit score. However, closing many accounts with small debts and replacing it with one consolidated loan could show that you’re managing your money more responsibly, providing you’re paying off the new loan on time.

Can I get a debt consolidation loan with poor credit history and no guarantor?

If you’re struggling, you may be able to find a guarantor who will assume responsibility if you don’t make your repayments. The stronger your credit history, the more likely a lender is to lend to you. You can try to improve your credit score before applying to give yourself a better chance of obtaining the loan.

Getting a debt consolidation loan with bad credit if you’re on a low income

Lenders use a variety of factors to assess your application. This can include your income, so if it’s low that could help to influence your ability to obtain a debt consolidation loan.

Can I get a debt consolidation loan without a credit check?

You’ll typically go through a credit check when applying for a loan. Bad credit history doesn’t always mean that you won’t get a loan, although it will make it harder than if you had a good borrowing history. If you’ve got a poor credit record, you may want to note that too many rejected applications could have an effect on your credit score.

Getting the best debt consolidation loan for you

If you’re thinking of applying for a debt consolidation loan, there are many factors that you should consider in advance, such as budgeting and comparing rates on deals. A debt consolidation loan isn’t right for everyone. If you’re considering applying, you may want to seek impartial advice first from organisations like StepChange and National Debtline.

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