How do I qualify for debt consolidation?

Debt consolidation isn’t a debt solution like a Debt Management Plan (DMP) or an Individual Voluntary Arrangement (IVA). This means there aren’t specific rules to qualify for it in the same way.

Instead, debt consolidation involves taking out a new loan to pay off your existing debts, whether they’re from previous loans or credit cards. So, whether you can get one will depend on the lender’s individual criteria.

We’ll take you through what debt consolidation lenders are looking for, so you can work out if you can get one.

Debt consolidation loans qualifying criteria

There isn’t one set of criteria to qualify for debt consolidation. Each lender will have their own separate criteria – and this is what they’ll use when they’re deciding whether to let you borrow.

If you’ve previously had problems with repaying credit – like missed payments or defaults – you might get turned down for some debt consolidation loans. Or, if you do get accepted, it could be at a higher interest rate.

Before you apply for a debt consolidation loan, it might be a good idea to test if it will accept you with an eligibility checker. This runs a ‘soft search’ on your credit history meaning that only you will be able to see that you’ve applied for a loan.

This is a good idea because if you apply for lots of different loans within a short period of time and the lenders run a full search on your credit report, these applications could all appear on your credit history. Other lenders or anyone who runs a credit check on you will be able to see these. If you’ve applied for a lot of credit at once, some lenders might think you’re ‘desperate’ for credit and reject you.

Qualifying for a secured debt consolidation loan

If you’re a homeowner, you could also apply for a secured debt consolidation loan. This might be an option for you to consider if you’ve had problems with credit in the past. You could be more likely to get accepted for a secured debt consolidation loan as lenders will have more security that you’ll keep to your repayments.

To qualify for secured debt consolidation, you need to own your own home – you can’t be a renter. It’s important that you’re as sure as you can be that you’ll be able to keep up with repayments of a secured debt consolidation loan. If you don’t, you could be at risk of the lender repossessing your home.

Still not sure if debt consolidation could help you? Read on and check out our page on ‘Is debt consolidation right for me?’ to see what you should consider.

Continue to the next section Is debt consolidation right for me?