Who can consolidate my debt?

You can consolidate your debt using a bank, building society, credit provider or credit union. You can take out either a debt consolidation loan, a personal loan or a balance transfer credit card to combine your debt into one monthly payment to one lender.

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Where can I get a debt consolidation loan?

You can apply for a debt consolidation loan through most major lenders on the high street. There are also other lenders, and brokers (like Ocean), that specialise in providing finance to those with bad credit, who may not have access to mainstream loans.

Debt consolidation loan lenders and brokers 

You should research your options thoroughly in order to find the most suitable option for you. You can do this by using comparison websites, going direct - or using a broker to search a panel of lenders for you. Brokers are a good way for you to save time on searching lots of different lenders.

Tip: Before you apply, we suggest you use an eligibility checker to find out the likelihood of being accepted – without leaving a footprint on your credit report.

Remember, if you consolidate your existing borrowing, you may be extending the term and increasing the amount you repay in total.

Do banks offer debt consolidation loans?  

Yes, most major banks and building societies offer debt consolidation loans – they can either be secured (these are usually for larger amounts and are tied to an asset like your home) or unsecured (not tied to an asset).

Bear in mind that if you fall behind with repayments on a secured loan you home could be put at risk.

Debt consolidation loans are designed for those who want to consolidate their debt, but you can also use personal loans for the same purpose. We suggest you speak to a mortgage adviser to help you decide which product is right for your individual circumstances.

Do credit unions consolidate debt?  

Yes, you may be able to consolidate your debt through a credit union if you’re eligible to join one and the other members agree. Credit unions are co-operatives ran by their members, who pool their money for other members to borrow.

They often provide competitive interest rates, but they can be hard to join. You need to have a common interest with the rest of the members, like a shared profession for example. Search ‘credit unions near me’ in a search engine to find credit unions you may be eligible to join.

Read on for everything you need to know about borrowing from a credit union.

Debt consolidation loans eligibility  

Lenders look for different criteria when deciding whether to lend to you but there are three common criteria they tend to consider:

1. Your credit score

When you apply for a loan the provider looks at your credit score to see how risky it’d be to lend to you. If you have a high credit score, they’ll think you’re good at managing your finances and they may be more likely to accept your application. You should also be able to access better interest rates if you’re seen as low risk.

If you have a poor or thin credit history, it’s likely your credit score is low. Financial companies will be more wary about lending to you - and may offer you higher interest rates if they do accept your application.

2. Your credit utilisation ratio

Your credit utilisation ratio is essentially how much credit is available to you versus how much credit you’ve used. It’s normally expressed as a percentage.

For example, if you’ve used most of the credit available to you, your credit utilisation ratio might be high – over 30%. If you’ve not used much credit it might be low – 30% or less.

Lenders like your credit utilisation ratio to be as low as possible because it means you’re more likely to be able to afford the repayments on your new line of borrowing. 30% or under is considered a good credit utilisation ratio and will normally allow you to access the best deals.

3. Your credit history

Financial companies search your credit history when you apply for any form of credit with them. They look for things like County Count Judgements (CCJs), debt management plans and anything else that indicates you’ve struggled financially.

Unfortunately, you’re less likely to be accepted if you’ve had any major negative markers (like defaults, CCJs or bankruptcy) on your credit history, because they’ll conclude you’re unlikely to make the repayments on time and in full.

There are also smaller things which can affect you getting the best interest rates, such as frequent address changes and not being registered to vote, as these make you harder to contact. Lenders may feel more comfortable lending you money if you have a stable address.

What can I do to increase my chances of getting accepted?

In order to maximise your chances of being approved for a debt consolidation loan (or a balance transfer credit card), you should work on building up your credit score, lowering your credit utilisation ratio and fix any errors on your credit report.

You could try our 12-week plan to a better credit score.

How can I find a debt consolidation loan?  

There are many choices for debt consolidation loans out there – it’s easy to become overwhelmed. So we take a look at your options:

1. Comparison websites

A good place to start is by using comparison websites to compare lenders. These will help you narrow down some good deals.

2. Broker

Instead of doing all the work yourself, you can ask a broker to search their portfolio of lenders to find for a deal for you. They can usually access products that you won’t find on the market because they’re only available through the broker.

3. Go direct

Not all financial companies are in brokers’ portfolios, so it might be a good idea to check out companies’ websites directly, to make sure you’re getting the best possible deal.

4. Use an eligibility checker tool

Once you’ve found deals you like, use an eligibility checker before applying. Formal applications leave a footprint on your credit history and can negatively impact your credit score. Whereas eligibility checkers only soft search your credit history - without damaging your credit score. They show you whether you’re likely to be accepted, so you can apply with confidence.

Check your eligibility for a debt consolidation loan

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