Debt consolidation loans for bad credit

• Cash flow challenge: Individuals with poor or limited credit history struggling to secure affordable borrowing to consolidate existing debts, leaving them juggling multiple high-interest repayments.

• Perfect for: UK borrowers with fair or poor credit who want to combine unsecured debts into one manageable monthly payment with clear information about costs, risks and alternatives.

Boost your cash flow Speak to an expert

What Is a debt consolidation loan?

A debt consolidation loan allows you to combine multiple existing debts such as:

• Credit cards

• Store cards

• Overdrafts

• Personal loans
• Catalogue accounts

Instead of juggling several repayments with different interest rates, you repay one loan over a fixed term.

Can you get a debt consolidation loan with bad credit?

Yes, however it may come down to a few things:

• Interest rates will likely be higher

• You may have fewer lender options

• Loan amounts may be lower
• Approval is not guaranteed

Many specialist lenders consider more than just your credit score. They may look at:

• Your current income

• Employment stability

• Debt-to-income ratio
• Recent payment behaviour

Using a lender that offers a soft search eligibility check can help you see your chances without affecting your credit score.

What interest rate can you expect?

If you have bad credit, APRs can range between:

• 15%-39.9% APR (depending on circumstances)

The worse your credit profile, the higher the rate is likely to be.

Example 1: Fair Credit (Mid-600 Score)

Loan amount: £8,000

APR: 19.9%

Term: 4 years

Monthly repayment: ~£240

Total repayable: ~£11,520

Total interest paid: ~£3,520

Example 2: Poor credit (below 600 score)

Loan amount: £8,000

APR: 34.9%

Term: 4 years

Monthly repayment: ~£289

Total repayable: ~£13,872

Total interest paid: ~£5,872

Consolidation only makes sense if:

• The new loan is cheaper than your existing debt
• You do not run up balances again
• The monthly repayment is affordable
  

Boost your cash flow Speak to an expert

Secured vs Unsecured debt consolidation

Unsecured loans

• No asset required
• Higher interest rates
• Most common option
  

Secured loans

• Use your home as security
• May offer lower rates
• Your property is at risk if you miss payments

If you are considering a secured loan, you can speak to our experts and we will help guide you on the process.

What credit score do you need?

There is no universal minimum score.

However, generally:

• 740+ (Excellent) – Best rates
• 670–739 (Good) – Competitive rates
• 600–669 (Fair) – Higher rates
• Below 600 (Poor) – Limited options, higher APR

Some lenders specialise in bad credit, but approval depends on your full financial situation.

Alternatives to debt consolidation loans

Debt Management Plans (DMPs)

One affordable monthly payment through a provider like:

• StepChange
• National Debtline
• MoneyHelper

Snowball or Avalanche Repayment Methods

Strategically paying down debts without new borrowing.

Credit Union Loans

Some credit unions offer lower-cost consolidation options.

Free, impartial advice is available and may prevent long-term financial harm.

How consolidation can help (If used correctly)

A well-structured consolidation loan can:

• Simplify repayments
• Provide fixed repayment dates
• Potentially reduce total interest
• Improve budgeting clarity
• Help rebuild credit with consistent payments

How Novuna Business Cash Flow can help

At Novuna, we work with lenders who consider applications from customers with varying credit histories.

Get in touch with our experts today and we will find a great fit for your situation.