Summary
Low-Rate Debt Consolidation Loans for People with Bad Credit
Struggling with multiple repayments? A debt consolidation loan can combine debts into one monthly payment and may cut costs. Options include a new personal loan, a remortgage, or a second-charge (a separate secured loan). We map costs, risks and timelines in plain English so you can choose confidently. CeMAP-qualified, FCA-regulated advisers. Rated 5★ with 2,500+ Trustpilot reviews and 5/5 on Google.
What you’ll get (quick overview)
Clear comparison: keep debts separate vs personal loan vs remortgage vs second charge.
True-cost view: interest, fees and term shown side by side.
Credit-friendly start: soft eligibility review first; full checks only if you apply.
Budget fit: set an affordable monthly payment with a realistic term.
Mortgage checks: early repayment charges (ERCs) and equity position reviewed.
Risks explained in plain English, including the impact of securing debts on your home.
When to speak to an adviser
- Monthly payments are tight and you need a costs-versus-savings check.
- You have mixed debts (cards, loans, overdrafts) at high APRs.
- ERCs apply on your mortgage or your deal ends soon.
- Income is variable, self-employed or via a limited company.
- You were declined elsewhere or want to protect your credit file while exploring options.
Trust & transparency
CeMAP-qualified advisers. FCA-regulated. UK-wide support. Rated 5★ with 2,500+ Trustpilot reviews and 5/5 on Google.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Think carefully before securing other debts against your home.
Need a Debt Consolidation Loan for Bad Credit?
Are you looking for a debt consolidation loan but have bad credit history? Having debt hanging over your head can be worrying and if you also have bad credit that can make your situation seem even worse.
You probably have lots of questions, such as;
Can you get a debt consolidation loan with bad credit?
Will a debt consolidation loan make my bad credit score worse?
How do you go about getting a debt consolidation loan for bad credit?
Don’t worry – we will answer all of these questions and more and cover everything you need to know about this subject.
58% Customers can only access 58% of loans deals going direct to lenders 89% Success rate of lending through Mortgage BrokersTop Rated Bad Credit Debt Consolidation FAQ’s
Yes, alternatives include debt management plans, balance transfer credit cards, or negotiating directly with creditors. Each option has different implications for your credit score and financial situation.
Yes, it is possible to obtain a debt consolidation loan even if you have bad credit. However, loans might come with higher interest rates. Exploring options with lenders who cater to bad credit and consulting a broker can improve chances of approval.
Applying for a debt consolidation loan may cause a temporary dip in your credit score due to the credit inquiry and new loan. Over time, managing payments well can improve your score as you’ve cleared multiple debts.
Using a broker can significantly benefit those with bad credit due to their industry knowledge and connections with lenders who offer suitable loan options. Brokers can provide tailored advice and increase approval likelihood.
‘Bad’ credit scores in the UK vary by agency: Experian scores under 720, Equifax under 530, and TransUnion under 550 are typically seen as poor. Reviewing your credit report can help identify steps to improve.
Can You Get a Debt Consolidation Loan With Bad Credit?
If you currently have a bad credit score you might be wondering if it’s even possible to get a debt consolidation loan due to your bad credit.
The good news is that it is definitely still possible to get a debt consolidation loan even with bad credit.
However, the downside of having a less than stellar credit score is that your new loan may come with higher interest rates.
Can I Get a Mortgage if I Have Bad Credit?
A mortgage broker finds the best possible rate for your exact circumstances.
It is advisable to try to improve your credit score, if at all possible, before making your application for a debt consolidation loan.
What Is a Bad Credit Score?
A bad credit score in the UK will vary according to the credit reference agency used as their scoring systems do differ. Let’s look at some of the main credit reference agencies and their poor score ratings:
Considered a ‘poor’ credit score by agencies:
- Experian – 0-720
- Equifax – 0-530
- TransUnion – 0-550
- ClearScore – 0-519
- Credit Karma – 0-565
Bear in mind that this is just a rough guideline and the actual number may vary. Each agency uses a different scale of measurement, however, the higher the number the better.
With a superior credit score you have a better chance of being approved for a loan, credit card, car finance and the like, as well as getting higher credit limits and more competitive rates.
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Yes, a debt consolidation loan can combine multiple debts into one payment, often reducing your overall monthly payment. Be aware, it may require repayments over a longer term.
Yes, having no credit history can impact your ability to get a loan, as it doesn’t show lenders how well you manage credit. Building a positive credit history, such as timely credit card payments, can improve approval chances.
To improve your score: check for reporting errors, remain on the electoral roll, use credit responsibly, maintain low credit utilisation, and ensure timely payments on existing accounts.
Secured loans require collateral, such as your home. Failing to keep up with payments may result in losing the collateral. Ensure repayments are affordable to avoid such risks.
Continuing to use credit after consolidation can lead to further debt, negatively affecting finances and credit score. It’s advisable to manage current debts wisely to avoid worsening financial situations.
How Is Your Credit Score Calculated?
Your credit score uses a points system based on your credit file information. To try to determine your creditworthiness, several factors are taken into consideration, including:
- Your credit history
Late or missed payments are viewed negatively whereas making payments on time shows that you are reliable and less likely to default on future payments.
- How much borrowing you have
This includes how much credit you have, how long you’ve had it and the amount of borrowing you have used compared to the amount of credit you have available.
- CCJs (county court judgements)
If you have been taken to court because of missed payments, this can leave a mark on your credit file that can last for several years.
- Bankruptcy
Declaring bankruptcy will leave a negative mark on your credit file for six years.
- How many applications you’ve made
Making lots of applications for credit in a short amount of time can give the impression to lenders that you are not handling your finances well and can be viewed negatively.
- No credit history
Having no credit history can be viewed negatively because it doesn’t give an indication of how well (or badly) you manage credit. Having a credit card and making your payments on time will actually improve your credit score.
These are a few of the things that credit reference agencies use to form your credit score and lenders will use to assess how much of a risk you are when considering your application for a loan.
How Can You Improve Your Credit Score?
There are number of things you can do to improve your credit, such as;
Check your credit report for the details held by the credit reference agencies. Sometimes incorrect or out of date information may be affecting your credit rating. If there is any wrong information held against your name then you can submit a data dispute and have the incorrect data removed.
Being on the electoral register means that your address can be verified. Lenders like to be able to confirm your name and address, and the electoral register is a good way to do this. You can prove where you live even if you are living with parents, or in shared accommodation. Not being registered could result in a delay with any loan applications you make.
If you are using credit cards to pay for basics such as groceries, or frequently withdrawing cash on your credit cards, it could suggest that you are too reliant on credit or that you struggle to manage your finances.
Keeping the same credit cards for a long time suggests that you are maintaining them. Making your payments regularly and on time will be viewed as a positive by lenders.
The lower your credit utilisation, the more favourably it will be judged by a lender. For example, if you have a £1000 credit limit but you have only used £300 then your credit utilisation is 30% – a healthy amount which indicates that you are not overly reliant on your credit.
Making payments via direct debit can help improve your credit score. Using your overdraft wisely can also be viewed positively by a potential lender. Avoid missing payments as this will negatively impact your credit.
Lenders are looking for stability and a long credit history so that they can assess your creditworthiness and reliability. Although moving house may be unavoidable, and not necessarily a bad thing, moving home or changing your job often may count against you when you apply for a loan.
Improving your credit score will improve your chances of being approved for a loan and of obtaining better rates.
Can a Debt Consolidation Loan Help With Bad Credit?
If you currently have a bad credit score and debts you may feel that your case is hopeless, but don’t despair. You can apply for a bad credit debt consolidation loan in the UK even if you have missed payments, bad credit or even CCJs.
Knowing which lenders will be willing to consider you for a debt consolidation loan for bad credit will increase the likelihood of you being approved. Using a broker can help your chances considerably due to their expert knowledge and wide range of contacts in the industry.
Securing a debt consolidation loan can help your financial situation by:
- Consolidating your borrowing
Combining multiple debts into a single monthly loan payment can simplify your credit and make it easier to handle
- Reducing your monthly payments
Clearing other loans, credit cards, car financing, store credit etc means that you could end up with a single payment each month which totals less than your previous combined payments. Bear in mind that you will probably have to make repayments over a longer term.
- Improving your credit score
Although initially your credit score may dip due to you making an application and taking on more borrowing, your score should start to improve because you have cleared several outstanding debts and made your finances more stable.
Note: there is no obligation to close your old lines of credit and in fact keeping your credit card accounts open will help your credit score – so long as you don’t fall into the trap of continuing to use your credit, building up more debt and overstretching yourself financially. If you take on more debt you run the risk of making your credit much worse.
Post-bankruptcy, obtaining a loan is challenging but possible. Some lenders specialise in offering products to those with complicated credit histories, though rates may be higher and terms more restrictive.
It can improve your chance by simplifying your debt obligations and potentially improving your credit score if managed correctly. However, each individual’s circumstances and lender requirements vary.
Having sufficient equity in your property can help replace unsecured debt with a mortgage, potentially offering better terms. However, this comes with the risk of converting unsecured debt to secured debt, which can affect your home.
A broker might advise against consolidation if it means changing unsecured debts to secured ones, possibly resulting in higher long-term costs or risk to your property if payments aren’t maintained. Brokers aim to find the most appropriate financial strategy for your situation.
Yes, a debt consolidation loan combines multiple debts into one, simplifying payments. It is essential to confirm which debts are eligible for consolidation with the chosen lender.
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Summary
If you have debts and a poor credit score there is still hope. As noted above, there are pros and cons, but a debt consolidation loan for bad credit may be a solution to get your financial house back in order.
Here at The Mortgage Broker we have years of experience in getting debt consolidation loans even with bad credit scores and will be happy to help you find the best lender to suit you. Contact us for a free consultation and a member of our friendly team will call you at your convenience to discuss your options.