If you’re repaying multiple debts and finding it difficult to stay on top of them all, or simply looking for a more manageable way to repay, a debt consolidation loan could help.
By combining your debts into a single monthly repayment, there’s only one thing to keep track of—giving you some additional peace of mind.
Of course, taking out a debt consolidation loan means applying for additional credit, which can be tough if you’ve got multiple existing debts or your credit score has taken a hit. This is where guarantors come in.
In this guide, we’ll explore what guarantors are, how they work when consolidating debts, and how you can check whether you need a guarantor.
If you have multiple forms of debt—whether through loans, credit cards, or overdrafts, for example—managing them all can be a hassle.
With a variety of repayment schedules and amounts to stay on top of, it could quickly start to feel overwhelming.
This is where debt consolidation loans come into play. By combining multiple debts into a single payment, there’s less to keep track of and a weight off your mind.
But who is eligible to consolidate debt, and what happens if you have a low credit score?
We’ll explain all in this guide to debt consolidation eligibility, so you can make an informed decision with confidence.
What is a debt consolidation loan?
A debt consolidation loan is a method of borrowing, through which the loan is used to repay existing debts and replace them with a single new debt.
Debt consolidation loans can come in many forms, including both secured and unsecured loans.
They are commonly used to combine multiple debts into a single debt, which is easier to manage and repay each month.
By consolidating, you may extend the term of your debt and increase the total amount you repay.
Am I eligible for debt consolidation?
Debt consolidation loans are essentially regular loans, meaning a lot of the same eligibility criteria apply.
This might include:
- Your income—how much money you earn
- Your credit rating—as an indication of your borrowing history
- Your debt to income ratio—the amount you currently pay towards existing debts
Each lender will have its own criteria and methods of evaluation, but the items listed above will usually have the largest influence on their decision.
While it’s all well and good knowing what lenders check, how do you find out your current eligibility to consolidate debt? This is where we come in.
How to check your eligibility
To check your eligibility for a debt consolidation loan, simply follow these steps.
Step 1: Tell us about your circumstances
Head over to our free eligibility checker and enter a few details about yourself, your circumstances, and the amount you’re looking to borrow.
Step 2: Check your eligibility with a soft search
We’ll then run a soft search on your credit report, meaning it won’t appear in your credit history.
By doing this, we’re able to find lenders that are a good match for your circumstances and are more likely to approve your application.
Step 3: Explore your debt consolidation options
With Aro, you can check your eligibility for debt consolidation loans and browse your list of any available lenders and find one that feels right for you.
What to do if you have low credit or aren’t eligible
If your eligibility check has flagged that you have a low credit score, the first thing is to not worry. Many people go through periods of bad credit at some stage, and it doesn’t necessarily mean you won’t be able to consolidate your debts.
For example, by using a platform like ours to check your eligibility, you’re already going to be shown lenders that are a better fit for your circumstances.
In addition to this, there are other options available to you:
Secured loan
While an unsecured loan relies heavily on factors like your credit score to determine eligibility, a secured loan can often be more flexible. This is because secured loans tie the debt to your property, as a form of additional security for the lender.
This means that lenders will be more willing to lend money even if the person applying has a low credit score. However, because the debt is secured against your home, you risk losing your property if you do not keep up with repayments, so it’s important to stick to the repayment schedule.
Your home may be repossessed if you do not keep up the repayments on a mortgage or any other debts secured against it. Think carefully before securing additional debts against your home.
Guarantor loans
You can also use a guarantor when you borrow, meaning a person with a higher credit rating agrees to become jointly liable for the debt in the event that you miss repayments.
Your guarantor can’t have any financial links to you, which usually rules out partners or spouses but can be a friend or family member.
Learn more about borrowing with a guarantor in our guide to guarantor loans.
Balance transfer cards
If you’re thinking of just consolidating one credit card, you could also consider a balance transfer card and repay the amount without the interest building on it.
Learn more about balance transfers in our guide to balance transfer cards.
There may be a fee to transfer a balance. Once a 0% period ends, the card’s usual rate will apply.
How to improve debt consolidation eligibility
As well as making gradual improvements to boost your credit score over the long term, one of the best things you can do to improve your approval chances is to shop around.
This means taking time to explore the market, understanding your credit history, and being rational about what is realistic.
Thankfully, with tools like our eligibility checker it’s easy to make a smart choice.
Check whether you are eligible for a debt consolidation loan
Ready to get started? Head to our free loan eligibility checker to start your search and find a debt consolidation loan to fit your needs and circumstances.
36.8% APR Representative (fixed)
