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How Do I Know If I’m Eligible For a Debt Consolidation Loan?

At Consolidation Expert, we could let you know whether you’re eligible for debt consolidation without impacting your credit score.

If you are weighed down by debts spread across multiple credit cards, loans, overdrafts and other credit facilities, you may be wondering whether consolidating everything into one loan with a manageable monthly repayment could be a viable option.

But how can you quickly, easily and safely determine if you are actually eligible to take out a debt consolidation loan?

Each lender will have their own specific eligibility criteria that applications are assessed against. However, there are some common requirements and standards that most lenders consider when evaluating candidates for consolidation loans.

While you can review general eligibility factors, the quickest and most accurate way to get a definitive answer tailored to your individual financial situation is to simply apply directly to a lender or broker.

Here at Consolidation Expert, we provide an easy online application process that allows you to get an initial indication of whether debt consolidation is feasible for you, without negatively impacting your credit score. Read on for a detailed overview of debt consolidation loan eligibility, and why applying directly is the optimal way forward.

Representative 14.8% APR

We are a broker, not a lender.

Representative Example: Borrowing £15,000 over 60 months, repaying £355.28 per month, total repayable £21,316.57.

Total cost of credit £6,316.57.

Interest rate 14.8% (variable).

The lenders on our panel offer loans for 12-360 months, with rates from 4.7% APR to 42.6% APR.

The Representative Example is based on all loans paid out by lenders between 1st Jan 2022 and 31st Dec 2022.

Key Takeaways:

  • Each lender has their own eligibility criteria, but common factors considered include income, credit score and total debt levels.
  • Certain circumstances like CCJs, bankruptcy, debt relief orders, or repossessions may restrict eligibility depending on the lender.
  • The quickest way to confirm if you are eligible is to complete an initial application. This is a soft credit check that won't affect your score.
  • Here at Consolidation Expert, our eligibility tool provides an instant indication of whether consolidation is viable based on the details you provide.

Key Factors That Influence Debt Consolidation Loan Eligibility

When you apply for a debt consolidation loan, lenders need to evaluate whether you meet their requirements to be approved for borrowing the amount you need.

Each lender will have their own specific eligibility criteria. However, some common factors typically considered include:

01. Your Income and Employment Status

Lenders want to see evidence that you have a steady and sufficient income to afford the monthly repayments of a consolidation loan over its term.

Stable full-time employment often makes approval more likely compared to irregular, part-time or contract work. Proof of income from all sources may be required.

02. Your Current Debts and Credit History

Those who already have large debt balances outstanding across credit cards, loans, overdrafts and other facilities may have greater difficulty being approved for a consolidation loan which is additional borrowing.

Likewise, a poor credit history and low credit score – indicating past missed repayments or defaults – could negatively impact your consolidation loan eligibility.

03. Your Credit Score

Most lenders will thoroughly check your credit file and current credit score when assessing your application. A good score helps demonstrate you are able to manage credit responsibly, making approval more likely.

04. Your Debt-to-Income Ratio

Many lenders will look at your total existing debt payments as a percentage of your gross monthly or annual income, known as your debt-to-income (DTI) ratio. A high ratio suggests you may already be paying a large amount of your income towards debts, limiting eligibility.

05. Collateral

For secured loans, some lenders may be willing to approve borrowing against an asset you own, like property or vehicles, if you have a limited credit history. The asset is collateral that can be repossessed if you fail to repay.

How Specific Circumstances Can Influence Eligibility

Beyond the typical criteria assessed, some specific financial circumstances relating to your credit history could restrict your eligibility for a consolidation loan:

01. County Court Judgements (CCJs)

If a lender has obtained a CCJ against you for failing to repay debts, this will show on your credit file. Most lenders are reluctant to lend to anyone with a recent CCJ.

02. Individual Voluntary Arrangements (IVAs)

An IVA is a formal arrangement between you and creditors to repay debts over time. Having an active IVA will severely limit eligibility for consolidation loans.

03. Bankruptcy

A record of bankruptcy tends to make lenders perceive you as high risk, since it indicates serious historical debt problems. Many may decline applications where bankruptcy has occurred in the last 6 years.

04. Debt Relief Orders

If you have an ongoing debt relief order, which pauses debt recovery action, lenders are unlikely to approve borrowing until the order completes.

05. Home Repossession

If property you owned was repossessed due to mortgage arrears, this also signals historic difficulty managing debts, reducing consolidation loan eligibility.

Why Applying Is the Best Way to Determine Eligibility

Rather than trying to predict in advance whether you are likely to meet approval criteria, completing an initial application could be a quick and accurate way to remove the uncertainty around your eligibility.

Here are some of the benefits of making an initial application for a consolidation loan:

  • It's a quick and easy process, especially with online application forms now available.
  • You provide details of your own specific financial situation rather than trying to self-assess against generic eligibility requirements.
  • Lenders can assess your unique circumstances and evidence more accurately.
  • The lender's decision indicates clearly whether a consolidation loan is viable for you or not, putting the unknowns to rest.
Important note:

Make sure that the initial application only runs a soft credit check, so it won’t affect your credit score.

Our initial application at Consolidation Expert won’t affect your credit score.

A Consolidation Expert advisor.

Apply with Consolidation Expert for Accurate Eligibility

Here at Consolidation Expert, we appreciate that applying to borrow more when you already have debts can feel daunting and stressful.

We aim to provide a flexible application process and match applicants to lenders capable of catering to their specific financial situation.

Our initial eligibility check is quick, easy to complete online, and conducted as a ‘soft search’, meaning it will not negatively impact your credit score. You’ll get immediate feedback on whether debt consolidation could be a practical solution for you.

If indicated as eligible, we’ll connect you with our panel of trusted FCA-authorised lenders who may be able to provide a tailored consolidation loan based precisely on your needs and circumstances.

A Consolidation Expert advisor.

Further reading

Read Is it Possible to Consolidate Short-Term Same Day Loans?
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Read Can I Consolidate Holiday Loans with Other Debts?
Worried man stranded on an island, coins falling around him
Read How Can I Pay Off My Debts Faster?
Man running in front of debts with a stopwatch behind