A debt consolidation loan is a personal loan that is used to consolidate 2 or more debts into one loan, meaning that you only have one larger loan to repay and keep track of. The benefits of consolidating debt, be it from credit cards, or existing loans are that

  1. Your monthly repayment amount can be reduced
  2. You are less likely to miss payments given you only have one loan to focus on

Virtually all lenders have debt consolidation loans. If, however, you have bad credit, many prime lenders (such as banks) will not consider your application. Don’t worry. There are other lenders in Australia who can lend to people with bad credit. Here are 3 important steps on how to get a debt consolidation loan with bad credit.

1. Know what your bad credit is

Firstly, you should obtain a copy of your credit report to know exactly what is listed. You can do this for free, but be prepared for it to take up to 10 days. You can obtain a free copy from Equifax. Determine if you have any of the following:

  • Credit defaults
  • Excessive enquiries
  • Bankruptcy
  • Writs/summons
  • Multiple credit files

With this information, you can now search for bad credit lenders and see which ones are willing to lend to your particular level of bad credit. Do not just randomly apply to many lenders, as this will create further enquiries on your credit report, which most lenders see negatively.

 2. Understand your exact debt position

You need to write down all of your debts and determine which loans/credit cards etc. you want to consolidate into one loan. Make sure you understand which ones are unsecured and which are secured. You also need to make sure if they have any penalty fees for paying them out early. It’s best you call the lender to confirm this, and if possible, get it in writing.

 3. Speak to the lender first

You are far better off speaking to a lending consultant about your situation before you apply. They will be able to give you valuable information about your situation and will either provide assistance with your application or advise you are better to try another lender.

Debt consolidation loans for people with bad credit are available; in fact at Fair Go Finance we regularly assist clients in this situation. Find out more about our debt consolidation loans or alternatively, contact us.

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Are you eligible to apply?

WARNING - DO YOU REALLY NEED A LOAN TODAY?*

It can be expensive to borrow small amounts of money and borrowing may not solve your money problems.

Check your options before you borrow:
For more information about other options for managing bills and debts, ring 1800 007 007 from anywhere in Australia to talk to a free and independent financial counsellor.

Talk to your electricity, gas, phone or water provider to see if you can work out a payment plan.
If you are on government benefits, ask if you can receive an advance from Centrelink.
www.humanservices.gov.au/advancerepayments

The Australian Government’s MoneySmart Website shows you how small amount loans work and suggests other options that may help you.

* This statement is an Australian Government requirement under the National Consumer Credit Protection Act 2009.