Can you get debt consolidation loans with bad credit?

Applying for a debt consolidation loan can be an important step toward improving your financial health. Provided you’ve done your research; a debt consolidation loan can save you money and hassle when it comes to your monthly debt repayments. But are debt consolidation loans available to borrowers with bad credit? Let’s find out. 

What is a debt consolidation loan?

A debt consolidation loan can be an effective way of simplifying your borrowing and taking back control of your monthly repayments. When done correctly, debt consolidation loans can also save you money. If you have multiple lines of credit that you pay back each month, you can apply for a debt consolidation loan that allows you to pay them off in one instalment. 

So, instead of having multiple repayments going out of your account each month, you only have to pay back the new loan that you’ve just taken out. At Koyo Loans, we provide unsecured personal loans that you can apply for to consolidate your debt for amounts between £1,500 and £12,000. 24.9% APR Representative. 

When is a debt consolidation loan a good idea? 

Your first job is to calculate how much money you owe. For instance, if you owe £3,000 across three separate credit cards, a debt consolidation loan is viable if you can access one that has a lower interest rate than your existing borrowing. You can use our loan calculator to work out how much you can potentially borrow and how much APR you’re likely to pay back. 

If it makes sense financially, you can then apply for a debt consolidation loan. When the money arrives in your account, you can use it to pay off your credit cards. You are then only responsible for meeting the repayments on the debt consolidation loan that you have just taken out.

What credit score do you need to apply for a debt consolidation loan? 

It’s difficult to say precisely what credit score you need to apply for a debt consolidation loan, as each lender operates slightly differently. What’s more, the three credit bureaus in the UK – Equifax, Experian, and TransUnion – all score your credit history in different ways. 

However, to access a debt consolidation loan with most lenders, you will need at least a fair credit score. If you try and access a debt consolidation loan with poor credit, it’s likely that you will be subject to high-interest rates if you’re offered a loan in the first place. 

Are there debt consolidation loans available for people with bad credit? 

Borrowers with bad credit will struggle to get debt consolidation loans, but it doesn’t mean it’s impossible. When you research the market, you will find that your choice of deals is limited, and you’re likely to be offered high-interest rates and uncompetitive terms. 

Still, some lenders provide debt consolidation loans for people with bad credit. You might also have more luck by searching for secured or guarantor loans as opposed to unsecured loans. This is likely to increase your chances of being approved, as you’re offering something to the lender as collateral. 

Ultimately, if you have a history of poor credit, you might find that it’s unfeasible to apply for a debt consolidation loan. Remember, they’re only likely to work out for you if they make your life easier and reduce your monthly repayments. If you have any questions about our debt consolidation loans, you can contact one of our team before submitting an application. 

Koyo Loans is the trading name of BETR Technology Ltd. Company No. 11483187. Registered Office: Huckletree Soho, Ingestre Court, Ingestre Place, London, W1f 0J