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Why bad credit history with CCJs and defaults won’t stop you getting a debt consolidation loan

If you have a less than perfect credit history, you’re not alone. In the UK, someone is declared insolvent or bankrupt every four and a half minutes, while the Citizens Advice Bureau deals with over 8,000 new debt cases every day.

There are many ways that your credit history can suffer. You may have missed payments on loans or credit cards or you may have made your payments late. You may have defaulted on a debt or be in arrears with a loan or mortgage. Or, you may have a County Court Judgement (CCJ) for non-payment of a debt.

Whatever issues you have experienced, having a less than perfect credit history might lead you to believe that you won’t be able to take out any further credit. However, this is not the case. Even if you have a poor credit history, you can still get a debt consolidation loan. Keep reading to learn more.

What is a debt consolidation loan?

Debt consolidation loans help you to take control of your monthly outgoings and can simplify your finances. A debt consolidation loan involves you taking out one larger loan in order to pay off some or all of your other debts such as loans or credit cards. Instead of having various payments to a number of creditors you are left with one loan, one payment and one creditor.

Interest rates on debt consolidation loans can often be lower than other forms of borrowing. This means that paying off other debts with a debt consolidation loan can save you money. You will also often find that your total monthly payment to a debt consolidation loan is lower than the total payments you were making to your other debts.

In addition, as you’re making just one payment to one creditor, a debt consolidation loan can help you to simplify your finances. And, they are available even if you have a less than perfect credit history, as we see next.

Bad credit won’t stop you getting a debt consolidation loan

There are thousands of people in the UK with bad credit. Credit Action reports that 1,443 County Court Judgements were issued every day in the UK in the first quarter of 2012 while 314 people are declared insolvent or bankrupt every day.

However, even if you have defaults or CCJs, you can still benefit from a debt consolidation loan. Many lenders are happy to accept your application even if you have poor credit and the interest rate you will pay on your loan will often be determined by the type of adverse credit that you have.

And, if you take out a secured debt consolidation loan – where the lender takes a legal charge over your property as security for the loan – you may also pay an even lower rate on your borrowing.

Taking out a debt consolidation loan can actually help you to improve your credit rating

One of the advantages of a debt consolidation loan is that it can actually help you to rebuild your credit rating. Once your loan is in place, if you make all your payments on time and in full, your credit file will start to demonstrate that you are responsibly managing your debts. This shows lenders that you are capable of managing debt and makes it more likely that you will be accepted for further credit in the future.

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