I have numerous maxed-out credit cards and a half-used store account and I'd like to pay them all off with a consolidation loan, to reduce the interest I'm paying and clear them all up quickly. I'm paying around £600 per month in minimum payments and about half this clears the debt. I rent at the moment and the reason for pushing to clear debt is because I'll very quickly save enough for a mortgage deposit and I dislike paying more in rent than a mortgage will cost.

Shopping around I found a £14000 unsecured loan which, taken over 5 years with no early repayment penalties, would cost £280 per month (in reality I'd probably make double that payment most months because I'd still be better off cash flow wise).

I can clearly afford this as I've never missed a payment and I've been in this situation for several years. In terms of credit score I'm also looking good, given my age and the fact I'm not a mortgage-holder I don't think it could be much better.

Why would I be denied this loan? Is there anything else I can do other than throw what little disposable income I have at my cards and wait it out? I don't want to try another provider immediately because of the impact of multiple credit applications on my score but without applying I'll never know if I could be saving myself a bundle of cash!

  • It's going to be hard for us to give you an answer because it entirely depends on your credit situation. In the US, not sure about UK, they are required to send you a letter describing why you were denied. Jul 2, 2014 at 12:16
  • Unfortunately they don't do that here - it's a 'computer says no' response and their advice is to check your credit file... Which I did and couldn't see anything wrong, other than as mentioned, my age (26) and lack of property to use as collateral.
    – James
    Jul 2, 2014 at 12:54
  • The overspending of yours would have counted against you.
    – DumbCoder
    Jul 2, 2014 at 13:46
  • @DumbCoder In what sense?
    – James
    Jul 2, 2014 at 14:25
  • 2
    See you have maxed out your credit cards. That points to an overspender, even if they can pay it off within the required timeline. An moreover you have been carrying on your balances and making only minimum payments. That might point to lenders that you mayn't be able to pay back. The machine willn't see the fact that you are taking the money to pay all your debts. They only check earnings and spendings.
    – DumbCoder
    Jul 2, 2014 at 16:24

1 Answer 1


Your statements are logical, it should be easier to afford, however this is often not the case. Most in your situation, after getting the consolidation loan, continue the same habits that got them in the mess in the first place. So in most cases people have the consolidation loan payments along with about the same amount of debt payments. Which increases the likelihood of default.

Your best bet is to work like crazy and stop spending money. If you can find a part time job that pays around 1000/month, and cut your budget by 400/month you could be done with this in less than a year. (Probably 11 months as the amount you are paying to bills now will have an effect on debt reduction.)

A year of pain in lieu of 5 years of consolidation payments. The first sounds much more attractive to me.

Let the high interest rates work for you. Perhaps they can motivate you to find all available moniees to get this knocked out.

  • I didn't think banks gave out consolidation loans without requiring evidence that the cleared credit accounts have been closed? I would have thought that was a basic requirement of the loan, otherwise people would simply end up like you suggest. In reply to your points, they all make sense so thank you; however a part time job paying that much wouldn't be possible (especially post-tax for a second job) and cutting my budget isn't feasible, I very rarely splash out on anything otherwise I wouldn't make it to the end of the month. Sorry if that sounds negative, I don't mean it to at all!
    – James
    Jul 2, 2014 at 14:11
  • 3
    Even if they require such proof, what is to stop a person from either opening new accounts, or running up the current ones? Nothing. How many CC offers are sent to the typical home each week? How many CC commercials do you see watching an hour of TV?
    – Pete B.
    Jul 7, 2014 at 13:19

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