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

Written by

Shaun McGowan

If you’re thinking about getting a debt consolidation loan to help pay down your debts and get your finances back on track, it can be difficult to stop yourself from applying for the first debt consolidation loan you see online. But your credit score will determine how much value you can get out of your decision to consolidate your debts.









But what credit score do you need to get a debt consolidation loan?

The easy answer is to say ‘any credit score’, but your credit score affects a number of things when it comes to your debt consolidation loan.

Lenders still use your credit score uniformly to decide a number of things about you as a borrower, and any potential debt consolidation loan they might approve for you.

Credit scores are split into five ranges, from low to excellent. Each of the three main credit rating agencies in Australia uses slightly different ranges for credit scores.

Credit score ExperianEquifaxCredit Simple





Very good
















Excellent Credit Rating 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).

How your credit history affects your loan options with Money Matchmaker

Very Good Credit Rating Debt Consolidation Loan

Provided you are able to make repayments you should be able to secure a debt consolidation loan easily with a very good credit score. If you’ve found yourself slipping down from an excellent credit rating to very good, now might be the time to consolidate your debts to avoid dropping further down the rankings.

With a very good credit rating debt consolidation loan, you may not get rates as good as those with an excellent credit score, but you’ll still get great access to a wide number of debt consolidation loan options and individual lenders - and choosing to apply for a loan at this time could be a signal to lenders in the future that you’re choosing to make responsible financial decisions and not take on further debts.

If you’re considering applying for major finance in the future, such as a home loan, then consolidating your debts beforehand to improve your credit score and clear your debts can be one way of showing you’re capable of handling the seriousness of a mortgage and its repayments.

credit history applicant

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Average Credit Rating Debt Consolidation Loan

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.

credit history

Fair Credit Rating Car Loan

A fair credit score may affect your ability to secure finance in most cases, but thankfully debt consolidation works a little differently. Unlike a car loan or home loan, there’s a specific purpose attached to the loan application that encourages lenders to provide you with options.

Why? Well, by repaying your debts and improving your credit score, there’s a higher chance of you considering a loan in the future with a different mindset. In the eyes of a lender, your choice to consolidate your debts and take control of your finances is a big step toward financial independence and one that will be considered in the future if you ever consider making a major application for a home loan.

A fair credit rating debt consolidation loan will require much more care when completing your application and choosing the supporting documents or collateral to provide. A hard credit check and a declined application can mean further damage to your credit score and fewer options as a result, while taking the time to ensure your application is as strong as it can be will mean the best rate for your situation, and the best chance of repaying your debts sooner.

Fair credit report

Low Credit Rating Debt Consolidation Loan

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.

Bad credit home loans

How can you check your score?

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  • Full legal name
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  • Residential address
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Ways to improve your credit score

Things to do to get your number higher are:

  • Pay credit card balances strategically
  • Stop applying for credit
  • Meet your loan repayments on time
  • Speak with your bank
  • Schedule your utility payments
  • Don’t use one type of credit

Consistency is key - aim for progress and not perfection and you’ll find both your credit rating and your car loan options improving over time.

A key to a good credit score is to monitor what is going on and report any problems when you see them. You can do this with the help of Money Matchmaker® for free.

How to improve your credit score

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We understand that the world of finance is complex, and offer free, extensive guides on Personal Loans, Car Loans and Business Loans, along with tools like our Budget Planning Spreadsheet to help you better manage and understand personal finance.

About the Author

Shaun McGowan from



Shaun McGowan

Shaun is the founder of and is determined to help people pay as little as possible for financial products. Through education and building world class technology. Previously Shaun co-founded and Lend.