What is a...

Consolidation Loan

A Consolidation Loan is a large loan used to repay your smaller debts, thereby consolidating your total debt into one monthly payment.

Because the Consolidation Loan may be repayable over a longer period, the repayments are usually less than the sum of those relating to the smaller debts.

How do I check how much I owe on my loans?

Your lenders will likely share your credit agreements with Credit Reference Agencies, where they’ll appear on your Credit Report showing your outstanding balance, current account status, and more.

You can check how - and where - your loans appear by checking your Credit Report for yourself. Our Multi Agency Credit Report collates your data from Equifax, Experian, TransUnion, and Crediva, letting you see everything you need in one place with the UK’s most detailed report.

If you haven’t already, you can try checkmyfile free for 30 days, then for just £14.99 per month. Cancel online anytime.

Are Consolidation Loans a bad idea?

They are not inherently good or bad — they can be helpful for some customers, but for others they can make a bad situation worse.

Debt consolidation loans will only hurt your Credit Score if you miss payments on the account. Adverse information such as late payments, arrears, and defaults can damage your repayment history, which in turn lowers your Credit Score.

Beware of Early Repayment Penalties when considering a consolidation loan, as settling debts early can – in some cases – cost you extra.

Do Consolidation Loans really help?

Consolidating your existing debts into one smaller monthly repayment is often advertised as all that is needed to put an end to the stress inducing demands made by nagging creditors. But consolidating existing credit commitments should not be considered a cure-all.

You should seek advice from a professional advisor if you are considering any sort of debt consolidation.

The UK's First Provider Of Online Credit Reports

Launched 21 Years, 35 Million Credit Scores & 8 Million Credit Reports Ago

The UK's First Provider Of Online Credit Reports

Related Jargon