Debt Consolidation Loans for Poor Credit – Reviews
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Have you been online searching for the best debt consolidation loans for poor credit? We help you cut through the noise and find debt consolidation loans that may be available for people with a lower credit score.
Let us help you find the best debt consolidation loans for poor credit, right here!
Debt Consolidation in a Nutshell
Debt consolidation is a tactic used by people who realise they will not be able to make their immediate credit repayments or have missed their last couple of repayments. This could be a credit card debt, personal loan, store card or something similar. It is not a strategy that is used when your debts have already grown uncontrollable.
It works by taking out new credit to pay off multiple existing debts. For example, you might take out a personal loan to pay off two other personal loans so you now only have one debt instead of two.
However, you don’t just do this to reduce the number of creditors you owe money too. You do it to get better repayment terms, such as lower interest rates on the new debt compared to the interest rates of the combines debts you plan to pay off.
Another benefit of debt consolidation is the new credit you take out may come with a repayment holiday or a period of 0% interest, making it easier to get on top of your debts once again.
Why Many People Can’t Get a Debt Consolidation Loan
Even if debt consolidation would work well for you, there is no guarantee that it is something you can do. The reason for this comes down to your credit file and your credit score.
To use the debt consolidation strategy, you need to apply for new credit to pay off the existing debts. And when you apply for the credit, you are likely to be subject to a credit history check by the creditor. This is for your protection as well, and makes sure you are likely to be able to pay them back and not fall into more debt.
The problem here is that you might not have a good credit score, and that could cause your credit application to be rejected. Thus, debt consolidation is not as accessible as you will have hoped.
A Word on Credit Scores in the UK
There are three big Credit Rating Agencies (CRAs) in the UK and they all have different ways of determining your score.
To make things even more confusing, they don’t even measure the score the same. Whereas Experian measures between 0-999, TransUnion measures between 0-710 and Equifax measures between 0-700.
To understand your score, you will have to consult the information on the CRA you are using.
How to Improve Your Credit Score Before Applying
Debt consolidation is not something that you will plan months in advance. Often, you experience an unforeseen expense and miss a payment at short notice, meaning you must apply for credit to complete debt consolidation at short notice as well.
This is an issue because it can take months to improve your credit score and improve your chances of getting the credit you need to complete debt consolidation.
But there is one thing you should do before applying…
You should use a free trial period on Experian and the other credit file sites to look at your file and identify any mistakes. Sometimes credit files can include mistakes that wrongfully decrease your score. By getting these removed, you have a better chance of getting the loan or debt consolidation credit card you need.
Don’t Use a Scattergun Application Approach
Another word of advice when applying for loans and credit card sot consolidate debt is to limit your applications.
Trying to improve your chances of getting the credit you need by applying everywhere is not effective. In fact, it can harm your file and increase your chances of rejection.
And that’s why it is best to seek out the best debt consolidation loans for poor credit first!
Can You Still Get a Loan with a Poor Credit Score?
Yes, you don’t need to have the perfect credit score to get a debt consolidation loan. Because banks and building societies offer personal loans specifically for debt consolidation, they don’t expect your file to be squeaky clean.
Put it this way, you wouldn’t need the debt consolidation loan if you didn’t have debt.
But it all depends on the creditor and your personalised score. Some credit scores are worse than others, and debtors will need to borrow different amounts.
We can’t say for certain who can get what credit – and who can’t get any.
The Best Debt Consolidation Loans for Poor Credit
Debt consolidation loans are available from the big banks and building societies in the UK. We recently reviewed these personal loans in our best debt consolidation loan guide.
One thing we noticed about many of the big banks is that they make them exclusive to current customers. For example, if you want a Lloyds, RBS, Barclays or NatWest debt consolidation loan, you will need to hold one of their accounts already, sometimes for at least three months.
But if you do have one of these accounts, there can be an advantage for people with poor credit. It is often the case that they will assess your situation before conducting a credit file check, meaning they can inform you whether you are likely to be accepted or declined without looking at and marking your file.
Although this doesn’t improve your chances of getting the debt consolidation loan with poor credit, it does prevent you from having to get your file checked if they think you will be rejected.
This is beneficial due to the warning we made about making multiple applications earlier. If they think you will be rejected, they won’t check your file and you can then apply elsewhere without a recent credit file check visible (which will improve your chances of success.
Other Debt Consolidation Loans for Poor Credit
Other providers of debt consolidation loans which may be more accessible to people with poor credit are:
- Consolidation Express
- Oceans Finance
- Buddy Loans (with guarantor)
- Everyday Loans
Do your research, don’t apply everywhere at once, and head back to Money Nerd for more helpful tips!