What credit score do I need to get a debt consolidation loan

With an excellent credit rating, lenders will generally give you full access to credit, allowing you to get the best rates for your debt consolidation loan and dictate the terms that suit you best.

Of course, it’s probably unlikely that you have an excellent credit rating if you’re considering debt consolidation, but not everyone waits until they’re struggling with debt to bring it all together and pay it off.

If you’re finding yourself suddenly overwhelmed with an overdraft, credit cards, and other forms of credit racking up debts across your life, whether due to inflation, difficulties during the pandemic, or simply unfortunate decisions, it’s never too early to step back and think about how you can better manage your debts to avoid any further damage to your credit score.

On the plus side, if you are able to apply for an excellent credit rating debt consolidation loan, you may even be able to ask for discounted fees or negotiate better interest rates with your current lender (if you have an existing loan to consolidate).

An average credit rating is where the majority of Australians will find themselves when considering a debt consolidation loan; perhaps you’ve made some unfortunate decisions or missed a few payments and noticed your credit score sliding.

Whatever the cause of your current credit rating at this level, it’s important to understand that, while you’ll be subject to higher rates and stricter terms than very good and excellent scores, you’ll still have access to a decent number of competitive debt consolidation loans from a good pool of lenders.

Average credit rating debt consolidation loans aren’t necessarily as serious as a home loan, but if your goal is to remove your debt as soon as possible (and make the repayments as comfortable as you can!) then you’ll want to spend extra time comparing lenders and making sure you put forward an air-tight application.

If you need assistance, speak to a financial professional about how to complete your application for the best chance of approval, and any other additional actions you can take to show your trustworthiness to a lender or reduce your level of risk when applying for debt consolidation.

The low credit rating debt consolidation loan, also known as bad credit debt consolidation, is perhaps the most common rating application besides an average rating.

There’s no sugar-coating this; if you weren’t consolidating your debts when you first noticed things going downhill, chances are you haven’t until they reached close to the bottom.

With that out of the way, it’s equally important to state that this is not the end of the world, and this is almost exactly what debt consolidation loans are designed for.

Low credit ratings indicate to lenders that you have bankruptcies, defaults or other negative events in your credit history. In short, you’ll have to do a lot of work to convince a lender that you’re not a high-risk borrower, and you’ll also need to be prepared to do a lot of work on yourself and your finances.

If you’re considering a low credit rating debt consolidation loan application, make sure you seek out financial advice from a trusted, independent expert first.

They can use their expertise to advise you on how to apply and the best steps to take before doing so, but they will also be able to guide the personal side of your financial journey - helping you create a plan to slowly and consistently work your way out of debt, out of a low credit rating, and back into financial security.