If you've got several debts and would like to lower the amount you are required to spend each month, or would just like to make your finances a little easier to manage, you may want to look into a debt consolidation loan.

A debt consolidation loan could really help your circumstances, but it's important to bear in mind that they aren't right for everyone - so you should look into all of your options before committing to anything.



Unlike other debt solutions (such as an IVA [Individual Voluntary Arrangement] or bankruptcy), debt consolidation shouldn't have any impact on your credit score.

A debt consolidation loan simply allows you to repay your debts in one go - it doesn't involve asking your lenders to accept lower payments, for example, or write off any of your debt.

Just as long as you can keep up with your debt consolidation loan repayments, you'll be showing potential future lenders that you can manage your finances… which should help to keep your credit score clean and healthy. What's more, because you'll only have one debt to take care of, it should be easier to keep on top of your monthly payments from now on - meaning there's less chance of you missing payments and consequently damaging your credit score.

If you start missing your payments, though, this will affect your credit score. That's why it's important to only take out a debt consolidation loan if you're certain you'll be able to repay it in full and as planned.

Taking out a debt consolidation loan and using it to repay all your unsecured debts in one go can help to make your debt much easier to keep track of. This is because you'll have just one payment to make to one lender each month, instead of several.

You may wish to arrange to repay your loan over a longer period of time than your 'original' debts - which will make each monthly repayment smaller. This can help you make sure there's some extra money available each month - but it's important to note that you'll pay interest for longer this way, so you may pay more overall.