Debt consolidation loans for bad credit

If you're struggling to manage multiple debts and worried about the effect they're having on your credit score, you may want to consider a debt consolidation loan.

Last updated:

Post Office Money® Personal Loan

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.

Promoted

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.

Get personalised loan quotes

Save time by checking whether (or not) you’ll be approved with multiple lenders and get rates based on your credit score.
Late repayments can cause you serious money problems. See our debt help guides.

Frequently asked questions

We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you.

Ask an Expert

You are about to post a question on finder.com:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder.com provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and Terms of Use.

Questions and responses on finder.com are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
Go to site