However, debt consolidation is an effective option that will not have any adverse effect on your credit and could make it easier and more affordable to deal with a secured or an unsecured basis depending on your preferences and circumstances.

In a nutshell debt consolidation is when you take out a larger loan to pay off a number of smaller debts, including loans, credit cards, catalogue balances, etc. Although this may seem like a pointless process, as you will still owe the same amount, there are some key benefits to debt consolidation. Firstly, you will only have one repayment to deal with each month, so you won't have to deal with the time and hassle involved in dealing with a range of debts, and you can reduce the risk of missed or late repayments that could adversely affect your credit.

Secondly, you can reduce the amount that you have to pay out each month through debt consolidation, which leaves you with more disposable income each month. In some cases you can reduce your outgoings significantly through debt consolidation. If you are currently paying high interest debts such as store and credit cards you may be able to save on the amount of interest that you pay on your borrowing over the term of the loan.

If you want to take out an unsecured debt consolidation loan you will need to have good credit. You should also remember that unsecured consolidation loans are available up to a limited amount, which is generally your debt. You can take out debt consolidation loans on 25,000. The amount that you will be able to borrow will depend on a number of factors, such as your income, outgoings, employment and financial status, credit rating, etc. Repayment periods are usually up to five years, although some lenders may offer seven or ten year repayment terms, which can help to reduce the amount that you have to pay out each month.

If you are a homeowner then you also have the option of taking a secured consolidation loan rather than an unsecured one. Secured consolidation loans are often available to homeowners that cannot get unsecured finance, as the secured nature of the loan makes it more viable for the lender to take a risk. You can enjoy greater borrowing power with secured consolidation loans, although the amount that you can borrow will depend on various factors including the level of equity that you have in your home.

You can also enjoy longer repayment periods with secured consolidation loans, which can help to keep repayments down. By opting for debt consolidation you can make managing and keeping on top of your finances far more manageable, and you can avoid overstretching your finances through the payment of high interest debts.