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Consolidating bills is not an easy task, especially if you have a lot of debt.  The more debt you have the harder you may find it to obtain a debt consolidation loan at a low interest rate.  If you are not careful when selecting a consolidation loan, you could end up deeper in debt.

As you are searching for a consolidation loan, you must make it your goal to search for a loan that will lower your overall costs.  To accomplish that, you will want to find the lowest interest rate possible and have a plan to pay off your debt in three to five years.

Using credit cards to consolidate your debt is one type of loan that you can use if you do not have a large amount of debt.  Consolidating your debt on a credit card will require you to find a card with enough credit limits to cover the entire amount of the debt.  If you take out a personal loan for less than £2,000 you may find that the interest rate will be higher than if you take out a larger amount.  So if you require a loan less than £2,000, you may want to consider a credit card, because if you have a good credit rating, it will be likely that with a credit card you will be able to find a low interest rate, or a 0% introductory interest rate.

Another way to consolidate your loans is through a traditional debt consolidation loan.  A consolidation loan is sometimes an unsecured personal loan that does not require any security and is considered a risky loan to lenders and are usually more expensive and not easy to get if you have a lot of debt.  A secured personal loan will require you to provide collateral, such as your home, which can prove risky to you if you are not sure if you will be able to meet the monthly repayments.

You could also seek credit counselling or debt settlement, where you will have the assistance from agencies that will negotiate with your lenders to lower your monthly payments.  They will also help you to build a budget and come up with a financial plan to help clear your debt.  However, these services come at a cost, although there are agencies that do not charge you, you will end up paying with a bad mark on your credit rating.

If you are a student in Uni, you are probably busy concentrating on your studies and trying to get an education that can benefit you for the future. A proper financial education is not one of the most important things on your mind.  However, it is during your time as a student that you should start learning the basics of managing your finances.  By learning how to properly manage your finances early on, you will then be able to properly manage your finances in the future and start off your life with little or no debt.

If you own a credit card, you will want to avoid using it, except in emergency situations.  If you do use a credit card, then you will want to make sure that you pay off your balance each month.  Carrying a balance on your credit card will cost you extra in interest, so paying off the balance before the interest-free period will save you.

If you are paying bills, such as utility costs, you will want to make sure that the bills are paid on time.  By paying your bills on time, you will start building your credit history and a good habit.  If you fail to pay your bills on time you will be charged late fees, which can easily add up.  To ensure payment on your bills, you can set up a standing order or direct debit. A good credit history now will help in later life when you need a personal loan for buying a car or a mortgage to buy your first property.

Finding a good bank account is important, and because several banks offer discounts on student accounts you shouldn’t find it hard to find a good account.  You will want an account that will offer you an overdraft and a good interest rate.  It pays to shop around, so before settling for a bank, make sure that you check out what other banks are offering.

The UK banks are preparing to defend their market against the same problems seen in the US sub-prime market.

Will the US situation hit the UK? Boulger of mortgage broker John Charcol does not think so. ‘But it is something the regulators will be taking into account. A lot of borrowers in the US were on short term ‘teaser’ rates and suffered payment shock when they moved to the standard rate.’

This is something that many UK consumers are being faced with. Despite the UK’s belief that their market is immune, there are parallels between the markets.

‘In the UK it is looking more and more likely that the Bank Base Rate will peak at 5.25%. I would put it at a 50-50 chance. Even if the economy does suffer because of what is happening in the US, we will be less susceptible to a downturn as we have lower exports to the States.

‘In addition we don’t have the same high proportion of sub-prime borrowers on 100% home loans. But if there is any tightening of lending criteria it is going to happen in the sub-prime and adverse markets,’ Boulger says.

Boulger believes that ‘the lenders have found that credit scoring is a very efficient predictor of those borrowers who will default,’ Boulger says. ‘You can never be certain, but I don’t think in the short-term what is happening in the US will affect lending criteria here.’

This is dividing the market into two segments, those who will strengthen the market by investing in property to build wealth, and those who will undermined it by borrowing mortgages which they cannot repay.

If you are looking to get a loan, your credit history can have a big effect on the outcome of the loan.  If you have bad credit you will have to expect a higher interest rate, or you may be required to take out a secured loan.  That is why many people strive to build a good credit history.  Although building a good credit history may be hard for some, with time, discipline and hard work you will be able to build a good credit history.

To start rebuilding your credit history you will need to develop a budget and live by it.  Through a budget you will be able to know how much money is coming in every month and how much you are spending.  By listing all your income sources against your expenses you will be able to know how much you will be able to afford should you take out a loan.  You should never take on a loan that you are unable to comfortably afford.

Budgeting will help you keep track of your expenses and allow you to maintain better control on your finances.  Other things to consider to ensure your credit report will reflect a good credit history is to pay your bills on time and to pay them in full.  This includes your credit cards, store cards, or utility bills.  You will also want to review your credit report annually to ensure that there are no errors or suspicious activity.  If you find that there are errors on your report then you will want to take the necessary steps to remove them from your report.

If you are a student you will find that obtaining a loan can be extremely difficult.  It is difficult for students to obtain loans because most students are not employed full-time and do not have a sufficient level of income to meet the repayment requirements.  Many lenders consider lending to students risky, as they have to security to secure a loan, and majority of students to do have a full-time job to support the repayments of the loan.

However, if you are a post graduation student, most lenders will be willing to offer an unsecured loan to you.  Although the interest rate is higher compared to basic loans, lenders will work with the students to determine what monthly payments the student can make.  If you are a student and work a full-time job, then lenders may offer you a lower interest rate.  Lenders are more willing to allow post graduation students to borrow a sum of money if the student has employment after the school term.  Students who provide a work contract to work for a business after they graduate is a form of security for lenders.

If you are a student and require a loan, and are unable to obtain an unsecured loan from a bank or building society, there are other options.  You can look into the possibility of payday loans if you have a current bank account and a steady job, whether it is part-time or full-time, you just need proof that you are working, such as pay stubs.  Another way you can borrow is through credit cards.  However, this can be risky as you can easily fall into debt using credit cards, and if you have no credit history, credit card companies will more than likely charge you a high interest rate on the card.  If you are looking for additional funding for your schooling, it is best for you to shop around and compare prices, interest rates, and benefits from various lenders to ensure you get the best deal.

For people with bad credit, or no credit, it can be difficult to obtain a loan.  However there are lenders who offer loans for those with bad credit.  Majority of lenders only offer secured loans because they consider lending to those with bad credit a risky investment.  A secured loan means that the lender will require some form of security for the borrower that is equal to, or more than the loan amount.  The security offered by the borrower is usually their home or property.  However secured loans can become a bad decision if you fall back on payments, as the lender will be able to repossess the property to reclaim their funds.

When you apply for a bad credit loan, the lender will first check your credit score to determine if they will lend to you, it will also help them to determine what interest rate they will offer you.  Typically the interest rate that is offered to those with a bad credit history is higher than a standard loan rate.  The rate is higher because lenders are protecting their investment.  However, as with any loan the interest rate that lenders offer you depends on your personal situation.  It is best that you compare rates from various lenders to ensure you receive the best possible rate.

Bad credit loans are usually offered by lenders who have access to a variety of loan plans allowing them to offer you the lowest rate that fits your personal situation.  Those who have a better credit history are more likely to be offered a lower interest rate than someone who has a poor credit history.  However, you should be wary of any lender who offers a rate that you feel is extremely high.  You should never feel obligated to sign for a loan if you do not feel you are getting the best rate or the best service.

Debt Free Direct chairman Mike Blackburn, former chief executive of the Halifax, blames the increase in personal insolvencies on the banks.

“We are where we are because of excessive and imprudent lending decisions made by creditors, who end up with debtors strung up with debt they would never be able to deal with,” he said. “Why have the banks been squealing of late over their provisioning? Debtors are having credit thrown at them.”

The total number of personal insolvencies jumped in 2006, at least 45% to 67,584 cases. Debt Free Direct (DFD) estimates that 1m to 2m people are irreversibly over-indebted and will never be able to repay the capital on their loans.

The banks made £37bn in profit in 2006.  The banks have been criticised by several debt management charities for their careless lending.  Banks are deflecting the blame on individual voluntary arrangement (IVA) firms.

The banks claim that debt-management firms are selling unnecessary IVAs to consumers who do not need their services. The number of IVAs taken out last year increased from about 20,000 to 45,000 and their value increased from 15% to 30%.

HSBC raised the issue after its six months bad debt provisions increased in 2006 from £265m to £361m.

Recent reports suggest that banks are acting irresponsibly by releasing figures which states that teens are in serious debt because credit card companies have been lending unsecured loans to high school students.

Other reports have brought to light the fact that banks are issuing loans without asking clients for proof of income or referencing their consumer credit information.

The high levels of bad debt may be forcing credit card companies and banks to reconsider what they offer consumers.  Debt reached its highest level in 2006, with more than 100,000 consumers petitioning for insolvency.  This resulted in high losses for credit card companies and banks.

IVA companies have gouged into the profits of unsecured loan lenders, resulting in more losses.

Combine these with the Office of Fair Trading’s move to limit bank charges and fees on overdrafts, and the banks are reeling under the burden.

Early in 2007, credit card companies and banks were scrutinised and rebuked for not following regulations and making sure that consumers could afford to repay their unsecured loans.

This came following reports from consumer groups which stated that many borrowers were not checked for proof of income, or even had their consumer credit information report checked, before they were given unsecured loans.

Banks are not only buckling under the pressure and asking for proof of income, and running credit checks, but they are coming down harder on borrowers who have bad debts.

The move is causing mixed emotions among consumers. However, only time will tell if consumers will find other ways of borrowing personal loans.  While the move by banks and credit card companies is motivated by their determination to slow their losses, it may have a positive effect on the population.

There has already been an increase in secured loans, partly because unsecured lenders can now force the sale of a home to repay a loan, and partly because of the lower interest rates.

The top five selling personal loans in the UK at the moment all have interest rates of below 6.5 per cent. The Moneyback Bank offers an online loan at a rate of 5.9 per cent. Alliance and Leicester also offer a personal loan at the same rate of 5.9 percent. Slightly higher, coming in at 6.1 percent, are the personal loans from Halifax and Northern Rock. First Plus Exclusive offers a loan at 6.3 percent.

All of these rates are for online applications, although some of the lenders offer a range of application methods. The loans will only be approved for borrowers with good credit rates. They are also offered on a secured basis to homeowners. If you are looking for loans on an unsecured basis the rates are likely to be a little bit higher.

The Moneyback Bank offers you the option of earning back a proportion of the money that you spend on payment protection insurance. However, it is probably not advisable for all customers to opt for payment protection insurance in the first place. Alliance and Leicester now offer a fully automated online service which means that you can finalise the entire loan online and get your hands on that money faster. The Northern Rock 6.1 percent rate is fixed, while the Halifax loan offers a three month repayment holiday for the first three months of the loan.

Gone are the days when a person with bad credit could not get their hands on loans and credit cards. These days, pretty much anyone can get a loan, and in many cases it is even easier to get a credit card. All you have to do is watch out for the terms they are offered on, and the amount that you are going to be charged before you take out the loan. What this means however is that you if you have a poor credit rating, then it is important that you look into the various options that are open to you.

Credit cards are very easy to get approved for. In fact there are even stories of homeless people being offered credit cards and being approved for them when they apply. However, credit cards are extremely expensive. And if you have a poor credit rating, they will be even more expensive. In fact, for credit cards that are geared towards people with bad credit ratings, the rates charged can often be in excess of twenty per cent or more. Therefore, if you think that having credit is only going to tempt you into using it, and you do not think you need the credit, then it is a good idea to steer clear of credit cards.

Personal loans are the other option, and even if you have a bad credit rating, you will still be charged a lot less interest on a personal loan. If you have trouble being approved for a loan, you may consider taking it out on a secured basis or finding someone to guarantee the loan for you. However, unless you have some sort of financial emergency, it is wise to steer clear of credit that you do not need.