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Is debt consolidation good or bad for my credit score?

Is debt consolidation good or bad for my credit score?

Secured Loans > Our Loans > Bad Credit Loans > Is debt consolidation good or bad for my credit score

Is debt consolidation good or bad for my credit score?

Debt consolidation could be good or bad for your credit score. It could help you pay off debts quicker, and help you demonstrate good repayment habits, both of which could improve your credit score. However, defaulting on the loan could negatively affect your credit score.

The benefit of consolidating your debt is replacing many monthly repayments with one. This could make it easier to pay on time and show good repayment history – which could then positively affect your credit score.

Interest rates on debt consolidation loans may be lower than other types of credit – e.g. credit cards. So because a higher percentage of your monthly payment goes towards the loan principal, you could get out of debt faster.

  • Debt consolidation can help you manage your borrowing
  • You could pay off debts sooner, and pay less interest
  • Making payments on time could help improve your credit score
  • Missing payments could adversely affect your credit score
  • This could help you get out of debt faster

If you already have bad credit, it could be difficult getting approved for certain types of debt consolidation loan.

If that’s the case, a secure loan could be suitable. With this type of loan, the risk to lenders is reduced as a house or other asset acts as security on the loan. That could improve your chances of getting approved for a debt consolidation loan.

Bear in mind if you default on the loan, your credit score may be negatively affected.

How do debt consolidation loans work?

Can I get a loan with bad credit?

Warning: Late payment can cause you serious money problems. For help, go to moneyhelper.org.uk

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Evolution Money Limited is a licensed credit broker and service provider to Evolution Lending Limited. If your application doesn’t meet the underwriting requirements of Evolution Lending Limited we may pass your information to other lenders and brokers. Evolution Money Limited is a company registered in England & Wales, registration number 06987852 and registered at 9 Portland Street, Manchester, M1 3BE. Authorised and regulated by the Financial Conduct Authority, firm reference number 708324.

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