Debt Consolidation Loans for Bad Credit

If you are struggling to manage multiple debt repayments each month, a debt consolidation loan could help. We understand that it can be difficult to find the best loan for your unique situation, so here at CashFlex, we aim to find you the ideal lender, regardless of your credit history.

What is a debt consolidation loan?

The main benefit of a consolidation loan is the ability to combine all your usual debt payments into a reduced monthly payment, which will provide financial relief in the short term. Instead of trying to balance payments to multiple lenders each month, you will be able to make a single monthly repayment.

However, if the repayments are lower each month it could mean a lengthier loan term, resulting in more interest paid overall. As with all loans, it is important to consider whether consolidating your debts is the right option for your personal situation.

Can I consolidate my debt if I have bad credit?

If you are worried about a low credit score, it may still be possible to arrange a debt consolidation loan. For example, if you apply for a secured loan that offers an asset as collateral such as a car or house, the loan represents a lower risk to the lender. Although, it might be possible to find an unsecured consolidation loan if you meet a lenders loan criteria.

The lenders we partner with are known for their progressive and open-minded approach to lending, which means although your credit rating will be important, they may also consider whether the loan is affordable for you.

Before applying for a loan, you should ensure the debt repayments are affordable amount. If you have a poor credit rating you may still be offered a loan, although the interest rates could be higher, or the loan amount could be less. In addition, you need to be aware that if you default on a secured loan, your assets could be taken to recoup the money owed.

Can I put all my debts into one?

Yes, it may be possible to consolidate your debts into one single payment. The first step is to make a list of your outstanding debts, how much is owed, the interest rates and the date on which the payment is due. This will provide you with the figure which you need to borrow to be able to consolidate your debts into a single loan payment.

It is possible to combine several unsecured debts into a debt consolidation loan, such as credit cards, personal loans, overdrafts and payday loans. For example, if you have multiple outstanding credit card accounts you may be able to simplify and lower your monthly payments, in exchange for a longer repayment term and potentially increased interest payments over the loan term. As with all loans you should work out a comfortable monthly budget so that you know how much you can afford to pay for your monthly loan payment.

Does a consolidated loan help your credit?

If you have multiple outstanding debts which you are struggling to repay on time each month, this can have a negative impact on your credit score. This is because repeated missed monthly payments indicate poor financial management. However, it may be possible to improve your credit rating by arranging an affordable debt consolidation loan.

If you use a consolidation loan to repay outstanding balances, it will show that you have a clear financial plan. The next step is to repay your consolidation loan payment each month, as this will demonstrate excellent budgeting skills and an ability to repay debts on time. Many borrowers find that when they stick to the debt consolidation loan agreement, their credit rating soon improves.

Which company is best for bad credit?

Here at CashFlex, we have developed an innovative approach to lending. As a broker, we can help you find the best loan from our panel of up to 40 lenders, thanks to our 60-second FastCheck tool and 2-minute application form. Our lenders are able to offer loans from as little as £100 up to a maximum of £5,000, with repayment terms to suit you. For example, if you choose to apply for a consolidation loan of more than £2000, you will be able to choose repayment terms of 12, 18, 24 or 36 months.

The FastCheck tool will ask a few key details designed to assess whether you are likely to be approved for your debt consolidation loan, without performing a credit check. Ideally, you should be borrowing over the shortest time possible while ensuring the monthly repayment amounts are affordable.

If the result indicates you are likely to be accepted, the next step is to complete our simple online application form. We will share your details with our panel of lenders, who will carry out a soft search of your credit file, although this leaves no footprint on your file. You will be able to see soft searches recorded on your file; however other companies will not see this information.

As soon as the first lender shows a strong chance of approving your application, we will redirect you to their website to complete the full application. The lenders we partner with are authorised and regulated by the Financial Conduct Authority, which means they are committed to responsible, transparent and fair lending. Legally they will be required to complete a hard check of your credit report when you complete the full application, which will leave a footprint on your file.

However, at this stage, you will be matched to a lender which has already indicated a strong chance of approval. Instead of wasting time searching for a lender likely to approve your loan, we can help you find a competitive loan from a trusted lender. By applying once through our website, you will avoid having multiple hard credit checks carried out on your credit file. If you make too many applications in a short space of time there will be multiple searches recorded on your file, which can have a negative impact on your credit score.

Why can't I get a loan to consolidate debt?

If your application for a consolidation loan has been declined there are several possible reasons, although the reasons vary with each individual. The main obvious reason for a loan being declined is poor financial management, as a poor credit history and recently missed payments are important factors in lender's decisions.

Although our panel of lenders do not solely base their decision on your credit score, they will be looking at the affordability of the loan you are looking to borrow. As responsible lenders, if they feel the loan is unaffordable, your debt consolidation loan could be declined. However, there could be other options available to you, such as borrowing the funds from a family member or applying for a loan with a close friend or family member as a guarantor.

If you are struggling to keep up with debt repayments, there are several organisations that can offer free and impartial financial advice. To discuss your situation, we recommend contacting The Money Advice Service, Step Change, PayPal, National Debtline, the Debt Advice Foundation and Citizens Advice.