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Only 25 Percent Of Debt Consolidation Loan Borrowers Pay Off Their Debts

A recent survey carried out in the UK has shown that around a quarter of those that take out consolidation loans in order to repay other debts off actually manage to clear their debts off early. The survey was carried out by a financial website, which showed that around 25% of those taking out a consolidation loan to get rid of their smaller, higher interest debts were managing to get themselves out of debt earlier than they may have done otherwise.

Another financial service recommended that those planning to take out a consolidation loan to clear expensive credit card debt should the ensure that they close their credit card accounts rather than just cutting up the cards, as this decreases the risk of spending on the cards again, running up a high balance, and being left with both credit card debts and the consolidation loan that was taken out to clear them in the first place.

The recent report also highlighted the problem with debts levels in the UK at present, indicating that often consumers only realized that they had a debt problem when they were no longer able to keep up with repayments on financial commitments. An industry expert stated that consumers were struggling with a wide range of debts, particularly following the series of five interest rate rises over the past year, but mortgage repayments in particular were proving to be a huge problem for struggling borrowers.

It seems, however, that it is not all doom and gloom, as one building society found that the level of assets and savings in the UK far outweighed the level of debt, with the total value of assets and savings coming in a four times that of mortgages and debts. The report did point out, however, that the distribution of assets and wealth were mainly in the South East of England, the South West of England, and London.

Officials have commented that consumers need to be more aware of their debts, and should try and deal with them more effectively rather than wasting their money on over spending. As reflected by the figures, many consumers have found that debt consolidation is an effective way to reduce the strain of dealing with debt, providing further debt is not accrued once the original ones have been consolidated.

How Your Bad Credit History Hurts Your Chance Of Getting A Loan

Obtaining a loan or any type of finance can be a real challenge. If you have a bad credit history and you are trying to get a secured loan or buy a house, you will usually have to do even more work to find a lender that will be prepared to lend you the money. You will also have to pay a higher interest rate than someone with a clean credit history.

What Is Credit History?

Before you go looking for loan, it is crucial that you know more about your credit record. This is a recording of all your past financial commitments and contains information about your repayment reliability and the total amount of debt you are carrying.

Lenders look at this record to determine your credit worthiness, usually by assigning you a credit score. The lower your credit score the less likely a lender is to grant you a loan.

How Did Your Credit History Go Bad?

Your credit history is an ongoing record of information about you and your finances, so anytime you miss a payment it is captured in the file. This is the same if you have ever defaulted on a debt or failed to fulfil a financial contract.

Everything is captured in this record, missed mortgage payments, repossession, bankruptcy, CCJs, IVAs, credit card defaults, etc.

Credit reference agencies collect other information about you, such as changes in employment or address. If your record shows that you make such changes frequently this will also lower your credit score.

Will You Ever Qualify For A Loan?

Generally speaking you will still be able to get a secured loan or mortgage, but there might be certain restrictions on your borrowing. Because of todays culture of debt there are an ever number of increasing lenders who specialise in loans for people with bad credit. Just keep in mind that you will probably be charged a higher interest and maybe offered a lower loan amount.

The positive part of this is that once you have secured the loan you can start repairing your adverse credit history by making regular, payments on time. It will take a little time to improve your credit history, but it will happen.

What Type Of Loan Can You Get?

You have the option of going for a secured loan or unsecured loan. Unsecured loans are more difficult to get because you dont put up collateral as security for the loan. This is risky for the lender so expect them to require more stringent loan terms in this situation.

Secured loans, on the other hand, require you to provide some form of asset as collateral. Most of the time this means you will secure the loan with your house. The amount of money you can borrow and the interest rate you will pay are influenced by your credit history, your total amount of debt, and your homes value.

Different lenders weight these items different ways, so be sure to check with several to find one with a product suited for you.

Where Do You Look For A Bad Credit Loan?

Before you submit any loan enquiries, you need to research a number of different lenders and brokers. Find out about their interest rates, any special loan terms they may require, and any other specifics about their loan process.

You can do all the research you want, but be careful not to submit a large number of loan enquiries over a short time period. This kind of activity can actually damage your credit history further.

Generally if you have an adverse credit history the best way to source a good loan is to use an independent broker. Make sure that they are not tied to one lender but have access to a large panel. Find out what fees they will charge and what are the reasons for charging these fees.

There are a large number of both secured and unsecured loan brokers in the UK, some are ethical others not so much, so make certain that you speak to as many as possible.