A debt consolidation loan can be an extremely effective way to manage your debts, however you must learn to sever ties with any other unsecured credit provider in order for it to be successful.

That’s the advice given to debtors by one of the UK’s leading financial advisory firms. Accordingly, more than 40% of indebted people who apply and successfully qualify for a debt consolidation loan, hinder any chance of success by pursing their reliance on other forms of credit.

There are two reasons why this type of action is bad. The first and most obvious is that by continuing to apply for credit effectively renders the consolidation loan useless, as your monthly financial commitments increase almost immediately after the consolidation loan has reduced them.

The second reason is slightly less obvious, but by continuing to apply for credit and continuingly defaulting on your agreements can be devastating to your credit profile. This can be a major hindrance if you are advised to take a consolidation loan as a solution to your problem at a later stage, and are declined due to your past behaviour.

The general rule of thumb is to only use credit to control your credit if you are deadly serious about resolving your situation. If you feel that you cannot trust yourself with additional forms of credit then stay well away. Statistically, consumers struggling with debt are almost 60% more likely to require an IVA at a later date, through the mismanagement of such loans.