Monzo has launched a debt consolidation service with ClearScore that automatically repays customers' existing borrowing.
Monzo, the UK-based digital bank, has introduced a debt consolidation service built with ClearScore that the bank says will identify and repay a customer's existing borrowing directly with lenders. The service is available to UK residents aged over 18 who hold a Monzo current account. Representative APRs stand at 10.2% for loans between GBP 10.000 and GBP 35.000, and 21.8% for loans up to GBP 10.000.
The tool runs on ClearScore's Clearer technology, according to Monzo. Rather than disbursing loan funds to the borrower and leaving them to contact each lender individually, the system locates the customer's outstanding balances and sends settlement payments directly to the relevant creditors.
Debt consolidation loans typically work by combining several existing debts into a single new loan. Under conventional processes, borrowers receive the loan amount and must then arrange repayment of each existing balance themselves. It was also mentioned that this manual step can complicate matters at a time when customers are looking to simplify their finances, and that where balances are not repaid automatically, lenders may continue to assess affordability as though the old debts remain in place.
In addition, Monzo has described the direct-repayment mechanism as intended to give customers greater certainty that loan proceeds are applied to existing debt, rather than requiring a separate settlement process after funds are received.
Positioning within consumer lending
The launch adds a procedural layer to Monzo's existing consumer lending product rather than altering the underlying economics of a consolidation loan. Borrowers still take out a new loan, and the applicable representative APR continues to depend on the loan amount, in line with the figures disclosed by the bank.
Monzo has framed the feature within the broader retail banking and consumer credit space, where lenders have been working to reduce friction in loan applications while maintaining affordability assessments required under UK consumer credit rules. Automated settlement of existing balances addresses one aspect of that friction by removing a manual step from the borrower's side of the transaction.
Furthermore, Monzo has not disclosed expected uptake, anticipated lending volumes, or the commercial terms of its arrangement with ClearScore. The bank has described the feature as a first among UK banks, though it has not provided further detail on how the claim was assessed relative to other consolidation products in the market.
The service adds to a wider trend of UK banks and fintechs integrating credit-reporting and comparison data (such as that provided by ClearScore) into lending journeys, aiming to streamline how existing debt is identified and managed within regulated lending products.
