Debt consolidation loans for bad credit

Fast, flexible loans from Post Office Money

• Borrow from £1,000 to £25,000
• Instant decision in most cases
• Fixed rate and fixed monthly payments over the whole term
• Applications from self-employed considered

Representative example: Borrow £15,001.00 over 3 years at a rate of 3.1% p.a. (fixed). Representative APR 3.1% and total payable £15,718.32 in monthly repayments of £436.62.

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What is debt consolidation?

Debt consolidation is a method of combining multiple debts or loans into one. It’s often used to make repayments easier to manage and even to save money on interest payments.

How does a debt consolidation loan work?

If you’re struggling to manage multiple loans or debts, you can apply for a debt consolidation loan to combine all your debts under the one loan. You use the funds from the new loan to pay off your remaining debts and then continue to make repayments on the remaining loan.

By finding a loan with a lower rate than your existing loans or debts, you will also be able to save on interest and make it easier to meet your repayments. Successfully paying off your debt consolidation will help demonstrate your creditworthiness to lenders and improve your credit rating.

Can I get a debt consolidation loan with bad credit?

Yes, you may be able to get a debt consolidation loan if you have bad credit. However, you may be limited in the types of loan you can apply for, and may receive a higher rate than someone with good credit.

Types of debt consolidation loan

• Unsecured loan. Depending on your credit score, you may be able to get an unsecured personal loan to cover your existing debts. However, you may be limited in how much you can borrow and may receive a higher rate, especially if you have bad credit.
• Secured loan. If you own equity in your house, or have another asset you can use as collateral, you may want to consider a secured loan to consolidate your debt. A secured loan is seen as less of a risk to lenders, meaning you’re more likely to be approved, even with bad credit. You’ll also likely be offered more competitive rates and a higher loan amount than you would on an unsecured loan.
• Guarantor loan. A guarantor loan represents less risk for the lender, which will improve your chances of getting a loan. If you have bad credit, a guarantor may also help you get more favourable loan terms.
• Money transfer credit card. A money transfer credit card is similar to a balance transfer card, but lets you move money from your card into your bank account. You can then use this money to pay off your existing debts, and then pay off the balance on your card. However, you may find it hard to get a credit card if you have bad credit, and will also likely need to pay a fee to move the funds. You’ll also need a card with a high enough credit limit to cover your existing debts.

Frequently asked questions

• Will a debt consolidation loan improve my credit score?

  Yes, paying off your debt consolidation loan should improve your credit rating, as it demonstrates to lenders that you can handle debt.

• Who offers debt consolidation loans?

  Many credit providers will offer loan products that can be used to consolidate debt, including unsecured and secured loans. However, your options may be limited depending on your existing credit score and the amount of debt you need to consolidate.

• What happens if I can't repay my debt consolidation loan?

  If you’re still struggling to repay your debt using a consolidation loan, you should inform your lender and seek financial advice. You can get free advice from the government’s Money Advice Service, or by contacting a debt adviser.

• What interest rate can I get on a debt consolidation loan?

  The rate you receive will be based on factors including your credit history, credit rating, the amount you want to borrow and the type of loan you choose.