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How to consolidate debt with bad credit

How to consolidate debt with bad credit

Time to read – 2 mins 9 seconds

If you’re in debt and looking for methods of debt consolidation with bad credit you’re in the right place. This short article will talk you through the two main options available to you.

Debt Consolidation Loans

The most searched and known “solution” for consolidating debts is the debt consolidation loan. While this can be a useful tool, it isn’t always a good idea, and can end up increasing your existing debt through high interest rates.

If going down this route, be sure to do the following:

  • Shop around – compare different types of loan to find the one that works best for you. Credit can be useful for this, but make sure they are regulated by the Financial Conduct Authority.
  • Check if it is an unsecured loan or does it require to be secured against your property. A secured loan should be considered very carefully as your property may be at risk if you cannot maintain the monthly repayments.
  • Calculate the difference in your total level of debt with and without debt consolidation loan to understand how consolidating will impact your overall finances. Questions to ask yourself here include:
    1. Are my total monthly repayments lower with the loan?
    2. Is my total level of debt (including any interest and charges which apply to the consolidation loan) higher or lower with the new loan?
    3. Does the length of time to repay my debt increase, decrease or stay the same?
    4. Is the interest on the loan fixed? Is there risk of it increasing over time?

Remember - applying for bad credit loans will require a credit check. The imprint of multiple searches on your credit file over a short period is likely to have a negative impact on your chances of being approved for credit.

Formal Debt Solutions

Misconception: “I need a debt consolidation loan for credit”

Applying for a personal loan is not the only method of debt consolidation help for bad credit. At Cleanslate, we specialise in formal debt solutions. In these solutions:

  • Your credit rating has no bearing on your eligibility.
  • You make a regular single affordable monthly payment towards your debts, instead of multiple payments to multiple debts.
  • Interest and charges on your existing debts are frozen.
  • If you can’t repay your debts in a realistic timescale, it may be possible for unaffordable debt to be written off.

If you would like to learn more about debt consolidation without a loan, our team of friendly debt advisers are here for you. All advice we provide is 100% confidential and comes with no obligation.

If you are in debt and considering a debt solution, our dedicated team of expert money advisors are on hand to help. Check if you qualify or call now on 0141 648 4320 for a no-obligation, confidential consultation.

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