Debt consolidation loans are promoted as being an excellent way of getting in control of your debts. This is true but only for people with a strong credit history.
If your credit history is chequered or impaired, then it will probably be very difficult for you to acquire a debt consolidation loan unless you can get the companies that lodged the defaults on your credit file to remove them.
If you own property which has equity in it, you are far more likely to be successful in obtaining a debt consolidation loan, although the lender may ask for a second mortgage on your property to secure the loan. People who own property may be better off applying for more credit through their existing lender and apply for a “redraw” or “equity release”. If you can apply through your existing lender you are more likely to get a cheaper interest rate. The application process may also be easier as they know your history.
Unfortunately, people who don’t own property will struggle to secure a debt consolidation loan unless they have an unblemished credit history and a sustainable and strong income. In our professional experience, only well-paid individuals with an unblemished credit history are successful in obtaining debt consolidation loans. This has been our experience since the global financial crisis.
If you have a bad credit history there may be a more appropriate solution – that is a debt relief solution. Please read our other articles to understand what a debt relief solution is and how it may be able help you.