How to get debt consolidation loan with poor credit score

After many combined years in this business, we’ve become adept at understanding our clients’ debt management problems. So please allow us to take an educated guess as to where you are right now…

Your debts grew and grew. At first, it was all under control. Then you stopped crunching the numbers and adding up how much you owed. Then came the fees, the late payment charges – the letters, phone calls and home visits. Now, things are serious. You may be unable to afford essentials, and too frightened to open the post. If all the above sounds right, you drastically need a debt consolidation solution. But the nasty catch 22 of debt means that your financial circumstances will stop you from accessing many traditional debt consolidation loans because of your bad credit rating. If that also sounds right, read on to learn about debt consolidation solutions for those with poor credit.

Debt consolidation as a debt management plan

Debt consolidation is an effective form of debt management, offering the following advantages:

  • Debt consolidation can reduce the amount of money you’re paying in interest and late payment fees
  • You’re able to roll all your debts into a single debt consolidation loan with a single repayment each month, which will help with your budgeting
  • You may be able to spread your debt repayments over a longer period, thereby reducing your outgoings

How to secure a debt consolidation loan (even if you have a bad credit rating)

If you’ve exhausted all avenues of mainstream debt consolidation loans (such as personal loans from high street lenders), you may feel backed into a corner. At this point, it’s important to do two things…

  1. DO NOT apply for any more credit until you’ve researched your options and know what debt management solutions you are likely to be accepted for
  2. DO NOT be tempted to apply for a high-interest loan or multiple high interest loans

Now that we’ve covered what you shouldn’t do, here’s how to get a debt consolidation loan, even with poor credit…

Debt consolidation loans for bad credit

If you’re unable to secure mainstream debt consolidation, you may want to consider a secured loan. Secured loans offer up an asset to the creditor as insurance against the loan in the case of non-payment. The most common example of secured lending is Remortgaging, which ties the debt against your home (read more about Remortgaging here).

You shouldn’t enter into this form of lending lightly, as being unable to service your loan could result in the loss of the asset.

Should you be unable to offer security, or your credit rating is so poor that you don’t score for this type of credit product, you’ll need to look to debt insolvency solutions as an alternative. The following programmes are Government regulated debt solutions, and achieve the same end goals as debt consolidation (with some offering the bonus of writing off some of your debts if you meet certain criteria). Those end-goals being: making your debts more affordable, reducing the fees and interest you’re paying and lightening the burden you currently feel.

Individual Voluntary Arrangement (IVA)

A debt consolidation solution that allows you to repay your debts over a fixed period

An Individual Voluntary Arrangement is arranged by an IVA Provider – through whom you’ll repay your debts on a monthly basis.

IVAs are based upon how much you can reasonably afford to pay each month, with all remaining debt (of up to 80% of the total owed) written off after a period of either 60 or 72 months.

IVAs are suitable for homeowners, as they don’t require you to sell your property. There’s also no upfront payment required.

To qualify for an IVA you must:

  • Have liabilities that outweigh your assets
  • Be unable to pay debts that are due
  • Owe at least £5,000

Read more about Individual Voluntary Arrangements (IVA)

Debt Management Plan (DMP)

A debt consolidation solution with a repayment schedule that fits in with your income and expenditure

Like an IVA, a Debt Management Plan (DMP) is based upon your income and expenditure. DMP repayments are also made through a third-party – a Debt Management Agency. However the defining difference is that DMPs don’t allow for any of your debt to be written off.

To qualify for a Debt Management Plan you must:

  • Be unable to afford your existing unsecured debt repayments
  • Be able to afford lower payments each month
  • Be able to repay your debts in full within a reasonable period of time

Read more about Debt Management Plans (DMP)

National Debt Help are a friendly team of financial experts who help those in debt to break free from their situation. We don’t do jargon, nor do we judge. If you’re unsure as to where to turn or what your next step should be, we’re here for you.

Talk with our team in confidence about debt consolidation, even if you have a bad credit rating.

Call us on 0800 002 9051 or send us a message using our contact form.

 

 

 

 

*An Individual Voluntary Arrangement (‘IVA’) is subject to the customer meeting qualifying criteria and gaining creditor acceptance. Monthly IVA payments include fees and may differ to the example provided, based on the assessment made of your own personal circumstances – these fees will be clearly explained to you in writing by your IVA company. Debt write off amounts are subject to creditor acceptance and vary by individual customer based on their own financial circumstances, and are applied upon successful IVA completion.

Substantiation example, Someone owes £60,000, they pay £100 over 60 months which equals £6000, write off amount would be £54,000 which is 90% of total debt level. Upon submitting your details on this website we will pass your details to one of our approved partners as this website does not give any advice.

Free debt counseling, debt adjusting and credit information services are available from the Money Advice Service.

National Debt Help
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