Can you get a debt consolidation loan without collateral?

It is possible to get a debt consolidation loan without collateral (an asset to tie the loan to). This type of loan is known as an unsecured debt consolidation loan. Whether you are accepted will depend on your individual circumstances and the lender’s criteria.

6 min read
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What is a debt consolidation loan and how does it work? 

A debt consolidation loan is a form of borrowing that you can use to clear multiple debts, so you end up with just one monthly repayment. It can make managing your debt easier as you only have one interest rate, one lender and one monthly payment to think about. But be aware that consolidating your debts may mean you extend your loan term and increase the amount of interest you pay in total.

Debt consolidation loans can be secured or unsecured. While they both serve the same purpose (to combine debts into one), it is important to know the difference between them.

What is an unsecured debt consolidation loan?

An unsecured debt consolidation loan (or ‘personal loan’) is a loan that doesn’t require any collateral. Collateral is the term used to describe an asset, such as a house, that a loan can be tied to.

So, you don’t have to worry about losing your property if you fall behind with your repayments. However, you must still make sure you pay on time, every time. Otherwise, your credit score will be impacted by missed payments. Plus, the lender could take legal action to recover the debt (as a last resort).

Bear in mind that unsecured loans do tend to come with slightly higher interest rates than secured loans. This is because there’s more risk involved from the lender’s point of view since they don’t have any collateral to act as a safety net.

Read on to find out more about unsecured loans.

What is the minimum credit score for a debt consolidation loan? 

There’s no minimum credit score required for a debt consolidation loan. Each lender will use their own criteria and your credit score will differ depending on which credit reference agency you use.

Generally speaking, the higher your credit score, the more likely you are to be accepted. If you have a low credit score, you may find it easier to get a secured loan. This is because the lender will have your collateral as a safety net, which will reduce the risk of them not getting their money back.

It’s best to weigh up the pros and cons of each option before going ahead (more on this below). Secured loans tend to come with more competitive interest rates than unsecured loans. However, if you fall behind with your repayments, your home could be at risk.

Are personal loans good for debt consolidation? 

Whether getting a personal loan is a good option for debt consolidation, depends on your individual circumstances. It’s important to think carefully about this before applying for any kind of loan or credit. Here are a few of the pros and cons of personal loans for debt consolidation to help you decide if it’s worth it for you.


  • all your debt is in one place, making it easier to keep track of your finances, and allowing you to easily see it going down as you pay it off
  • you only have one lender to concentrate on, so you don’t need to manage multiple payments to multiple lenders
  • you may potentially save money on interest, as paying multiple interest rates can soon add up
  • you could reduce your monthly payments by increasing the repayment term - but remember that you could pay more interest in total by doing so


  • it may take you longer to pay off your debt if you spread your monthly repayments over a longer term – and you’d pay more in interest overall
  • you may not be eligible for a debt consolidation loan, depending on your individual circumstances
  • you may move to a higher interest rate than you’re currently paying, particularly if you have a low credit score
  • you may have to pay early repayment fees if you clear your existing debts early

Are secured loans good for debt consolidation? 

If you are a homeowner and you want to get a debt consolidation loan, you may be wondering whether you should get a secured loan or an unsecured loan. Here are some of the pros and cons of secured loans for debt consolidation.


  • you can normally get a larger sum with secured loans than you can with unsecured ones (up to around £100,000, compared to £25,000)
  • you may find it easier to get approved for a secured loan compared to an unsecured loan – even if you have a less-than-perfect credit score
  • you can spread your repayments over a long term with secured loans – but remember this can cost you more in interest overall


  • the asset you choose as collateral could be at risk if you stop paying
  • if you take out a secured loan over a longer term, you could end up paying more interest overall
  • with larger sums available, you may be tempted to borrow more than you need, which could lead to greater debt

How do I get a debt consolidation loan? 

Whether you opt for a secured or unsecured debt consolidation loan, follow these steps to help it go as smoothly as possible:

1. Check your credit report 

First, you’ll need to check your credit report before applying. Any errors or inaccuracies on your report can not only reduce your credit score, but they could also affect your chances of being approved. So fixing them should work in your favour.

You can check your credit file online through the three main credit reference agencies in the UK: Experian, TransUnion and Equifax. You can also check your Equifax credit report for free (for life) through our member-only platform, CredAbility.

2. Decide how much you want to pay and for how long 

Before you apply for a debt consolidation loan, have a think about how much you want to pay and for how long. Be realistic and take into account any future changes of circumstances that you can foresee, as well as your current income and outgoings.

Remember, it may be tempting to spread your monthly repayments over a longer term, to reduce your monthly outgoings - but this may mean you pay more in interest in total.

3. Compare loans 

Shopping around for a debt consolidation loan is essential if you want to find the best deal for you. Or you could always use a broker, like Ocean, who will do the hard work for you. The main things you want to keep an eye out for are:

  • the monthly repayment amount
  • the repayment period
  • and the total cost of borrowing

The last one is especially important. Don’t be swayed by interest rates alone, make sure you’re checking the annual percentage rate (APR) as this includes all compulsory interest and fees you’ll be charged each year.

4. Apply for a loan 

Before applying, use an eligibility checker. While these can’t guarantee your acceptance, they’ll give you a good idea of your chances. Making lots of applications in a short space of time will lower your credit score – but using an eligibility checker won’t impact your credit score at all.

Once you’re ready to apply, make sure you have all the documents that you might need to hand in case you need them later.

5. Clear existing debt with your new loan 

Once the loan has reached your account, pay off your existing debts with the funds. Do this as soon as you get the money, so you’re not tempted to use it elsewhere. Once you’ve done this, you’ll just have one loan to pay each month.

Check your eligibility for a debt consolidation loan

  • Reduce your monthly payments
  • Personal and homeowner loans available
  • Getting a quote is FREE and won't affect your credit score
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Intelligent Lending Ltd is credit broker, working with a panel of lenders. Homeowner loans are secured against your home.