How to get a debt consolidation loan: costs and eligibility

Debt Consolidation Loans for Bad Credit UK

Are you wondering where to get a debt consolidation loan with bad credit? You've come to the right place.

In this article, we’ll cover:

What a debt consolidation loan is.
The true cost of a bad debt consolidation loan.
How a debt consolidation loan works.
Where to get a debt consolidation loan with bad credit.
The pros and cons of getting a debt consolidation loan.

When it comes to combining debts, StepChange advises ensuring it aligns with your budget, making the new payment plan easier to handle.¹

I know debt consolidation loans can be a bit confusing, but don’t worry. We’re here to help you understand them.

Is it a good idea to get a debt consolidation loan?

Consolidation can simplify payments, but it replaces debt with new borrowing and does not itself prevent balances growing. See related guidance.

Compare the total amount repayable, interest, all fees, the term and early-repayment charges. A lower monthly payment can mean a longer term and a higher total cost. Securing previously unsecured debt against your home puts the property at risk if you cannot keep up repayments.

But that doesn’t necessarily mean you should consolidate your debts. Everybody’s situation is different. Also, there may be a better way to tackle your credit problem.

I suggest you get free debt advice from any reputable debt charity (e.g. StepChange, National Debtline or MoneyHelper).

They can assess your situation and recommend the most efficient and effective way out of your debt.

Debt Consolidation Pros & Cons

Understanding the pros and cons of debt consolidation will help you make an informed decision and manage your debts effectively. That’s why I’ve put together this table.

Pros	Cons
May shorten repayment if affordable and structured to do so	Ineligible for a loan
One monthly payment	Risk of defaulting
Potential interest rate reduction	Added costs
Fixed payments only with a fixed-rate product	Higher Interest over time
Credit effects depend on applications, repayment history and the wider file

How much can I borrow?

Available loan amounts and terms vary by lender and affordability; no range is guaranteed for a person with bad credit.

If you want to borrow more or less than what is allowed, you’ll need to search for a different loan provider.

Asking for more credit than you need is not a wise idea and could result in bigger debt.

Can I get a debt consolidation loan with bad credit?

When you apply for a loan to consolidate your debts, the lender will complete a credit check.

Each lender sets eligibility and affordability requirements. There is no universal UK credit-score threshold or guarantee of approval; income, commitments, credit history and any proposed security all matter.

Debt Consolidation Loans for Bad Credit — Source: MSE Forum.

Unfortunately, if you have a poor credit score, you might be rejected.

Or you might be approved but offered an interest rate much higher than the advertised APR representative example.

If the interest rate offered is higher than expected, this loan may no longer be beneficial for debt consolidation purposes.

Lenders assess an acceptable, sustainable income alongside spending and commitments. Income need not always come from employment; accepted sources vary.

Explore secured loan options

Loans Warehouse is a credit broker, not a lender. You can enquire about options based on your circumstances. Approval and terms depend on lender checks; an enquiry is not a guaranteed offer.

Compare the interest rate, fees, monthly payments and total amount repayable. A longer repayment term can increase the overall cost. Consolidating unsecured debts into a secured loan puts your home at risk.

MoneyNerd introduces enquiries to Loans Warehouse and may receive a referral fee. Broker and lender fees may apply and should be explained before you proceed.

Your home may be repossessed if you do not keep up repayments on a loan secured against it.

Enquire about secured loan options

How to get one

There is no magic formula to get a UK debt consolidation loan with a poor credit score.

But there are some things you can do to make sure you’re looking in the right places.

The best way to get a debt consolidation loan with bad credit in the UK is to apply to lenders that are more likely to accept people with bad credit.

Enquire about borrowing options through Loans Warehouse

You can also increase your chances by trying to make some quick fixes to your score. The most effective way to improve your credit score is to look for mistakes in your credit history.

If there is an error, you can ask the lender responsible for the error to remove it, and if they refuse, you can ask the credit reference agency to do it for them.

You should also register on the electoral roll, as this verifies your ID and can positively affect your credit score.

Where to get one

Banks and other lenders set different criteria. A poor credit history can limit options, but do not assume every high-street bank will reject you or every online lender will accept you.

Debt consolidation loans for those with a bad credit score are usually advertised more prominently by online lenders, although not exclusively.

A Loans Warehouse customer’s experience

Individual experiences vary. Compare the total cost, fees, repayment term and risks before applying. A lower monthly payment may mean paying more overall, and secured borrowing puts your home at risk if repayments are not maintained.

“This was by far possibly one of the nicest experiences I’ve had getting a secured loan.”

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Reviews shown are for Loans Warehouse. Search powered by Loans Warehouse.

Debt consolidation loans for bad credit UK

These historic provider names are not a verified current ranking or product panel. Check current availability, the firm’s FCA permissions and whether it is a lender or broker before relying on an offer.

These are not necessarily the best on the market or in a particular order.

Check current availability and a personalised quotation before treating any name below as an option.

#1: Finio Loans

Check current Finio availability, eligibility and personalised terms directly; the historic APR, amounts and terms are not a live offer. See related guidance.

#2: Shawbrook Bank

Check the current Shawbrook personal-loan terms and permitted uses; historic advertised APRs and term limits may no longer apply. See related guidance.

#3: Everyday Loans

Check the current trading name and product availability behind older Everyday Loans references. Historic rates are not a current quotation. See related guidance.

#4: Solution Loans

Verify whether Solution Loans acts as a broker and which lenders it compares. A broker does not necessarily provide the loan itself. See related guidance.

Advertising aimed at people with bad credit does not guarantee acceptance or an affordable rate.

#5: Pegasus

Verify the current Pegasus firm, role and permissions. Historic review or newspaper mentions are not evidence of current suitability.

Funding times and borrowing limits depend on the actual lender and checks; do not rely on an hour-after-approval claim.

Ask whether an initial eligibility or quotation check is a soft search before applying. Use the personalised terms for comparison.

Will it impact your credit score?

A full loan application may leave a hard-search footprint, and a new account can affect your credit score.

However, applying for many of these loans consecutively could alert lenders and cause your application to be rejected.

Credit can be affected by searches, new borrowing, utilisation and repayment history. Missed payments and defaults can cause further damage.

Can I get a guarantor loan for debt consolidation?

An alternative option to a debt consolidation loan for people with bad credit is to look for one of these loans with a guarantor.

If the person fails to make their monthly payments on time and in full, it will also be the guarantor’s responsibility. This is why most guarantors are family members or very close friends.

Guarantor age, residency, credit and financial requirements depend on the lender; there is no universal 25–50 age range.

A guarantee creates a serious repayment obligation for the guarantor and may affect their credit or assets. Both parties should understand the contract and consider independent advice.

Debt consolidation loan comparison

To compare debt consolidation loans between different lenders, you can use the representative APR.

For a regulated consumer-credit promotion using a representative APR, that rate or lower must be expected to apply to at least 51% of credit agreements entered into as a result of the promotion. It is not a promise to 51% of everyone who applies, and the rule should not be applied indiscriminately to mortgage APRC illustrations.

Many online websites provide a debt consolidation comparison function to make things easier. Don’t rely on these entirely, as they may not have been updated, and you could miss a better deal.

An advertised maximum APR is not the best way to establish your actual cost. Compare personalised quotations and the total amount repayable, including applicable fees.

Rejected for a loan? Consider a DMP instead!

And if you cannot get approved for any unsecured loans, a Debt Management Plan is another option.

Debt Management Plans are considered a way to consolidate debts without actually consolidating them.

They work by getting multiple creditors to agree to a plan where you make a single monthly payment, which is then split between everyone you owe.

Within the plan, you may even be able to agree for creditors to freeze interest to save you money.

Since you don’t pay any creditors off in this solution, you don’t need to apply for more credit and have your credit score assessed.

A DMP can affect your credit file. It is informal, so creditors may refuse, continue interest or take court action; free providers can explain these risks and alternatives.

We have more tips on DMPs and how best to use them to get rid of pesky creditors.

The final word

For more information and answers to common debt consolidation questions, see our other guides and tips.

We’ve recently published scores of articles on this topic to help you. And don’t forget that debt charities can provide a personalised support service.

StepChange is one of the best advice charities around, and they operate in Scotland, England and Wales. You can also visit MoneyHelper or Citizens Advice.