Debt Consolidation Loans for Bad Credit: Our Top 5 Picks

cutting up credit cards

Top 5 Debt Consolidation Loan Companies

The specifics of your debt consolidation loan will depend on your creditworthiness at the time of your application. With that said, the following companies offer some of the best debt consolidation loans for people with bad credit, which can be used for paying off multiple credit lines.

1. Bad Credit Loans

Crediful’s rating
Visit Site
  • Loans from $500 – $10,000
  • APR: 5.99% – 35.99%
  • Loan Term: 3 – 36 months

As its name suggests, Bad Credit Loans caters specifically to clients with poor credit. They connect you with online lenders that can help you get approved for a debt consolidation loan with bad credit.

There are no minimum credit score requirements to apply. They also offer a suite of resources designed to help you get your credit back on track from the ground up.

2. Upgrade

Crediful’s rating
Visit Site
  • Loans from $1,000 – $50,000
  • APR: 8.49%-35.99%
  • Loan Term: 36 – 84 months

Upgrade is an online lender offering personal loans up to a hefty $50,000. You can get your decision Upgrade in just seconds, and your application won’t have a negative impact on your credit score.

The loan proceeds for your debt consolidation loan will be automatically deposited into your bank account via ACH transfer within one day of clearing the necessary verifications.


Crediful’s rating
Visit Site
  • Loans from $500 – $35,000
  • APR: 5.99% – 35.99%
  • Loan Term: 3 – 72 months

Using a simple three-step process and proprietary technology, connects you with multiple online lenders with a single application process. This gives you the best opportunity for finding a debt consolidation loan that works for you.

Once your application has been submitted, approved lenders will provide the specific loan terms available given your creditworthiness and needs.

4. LendingClub

LendingClub logo
Crediful’s rating
  • Loans up to $40,000
  • APR: 6.95% – 35.89%
  • Loan Term: 36 – 60 months

LendingClub makes it easy to take control of your finances with a personal loan. Interest rates start as low as 6.95%.

You can use the debt calculator to learn how much you stand to save by using this tactic. Best of all, applying won’t affect your credit score, no matter the outcome of the application! You will, however, be assessed a one-time origination fee of 1-6%, which is automatically deducted from your loan total.

5. OneMain Financial

Crediful’s rating
Visit Site
  • Loans from $1,500 – $30,000
  • APR: 16.05% – 35.99%
  • Loan Term: 24, 36, 48 or 60 months

OneMain Financial offers personal loans with fixed rates and repayments and no prepayment fees. However, origination fees can be as high as 10% in some states. They don’t have any minimum credit score requirements to qualify for a personal loan.

You can receive your funds via written check or direct deposit, and depending on your application, you may even be able to get the money the same day.

Your monthly repayment amount will vary depending on the exact loan terms you agree to, but you can use OneMain’s personal loan calculator to make an estimate.

How does debt consolidation work?

Debt consolidation is the practice of taking out one larger loan to pay off several smaller ones. That way, you only have one monthly payment to worry about, and you might even end up saving a few bucks in interest.

Let’s say, for instance, that you have five credit lines you’re actively repaying: three credit cards, one student loan, and an auto payment.

All of these accounts are for different totals, of course, and may also have different repayment timing. The credit cards are due on the 15th while the student loans are auto-drafted on the 22nd, for instance, and the auto payment comes around on the 1st.

This makes it easy to miss payments (or find yourself desperately moving money around between your accounts to make it work). In addition to being a logistical hassle, having so many credit lines can drain your bank account when it comes to paying interest.

Turn Multiple Payments into a Single Payment

Credit cards, especially, sometimes have high interest rates; frequently at or over 20% APR. Only paying the minimum every month means you’re spending more than the sticker value for those items you put on credit.

That’s especially true when you’re repaying not just one credit card, but two. If each one levies an interest rate higher than 20%, it’s much harder to actually get ahead of your monthly debt payments. The reason is that a significant amount of the money you’re putting toward the project is going to interest.

This is why debt consolidation loans are such a useful tool. Instead of paying off five accounts, you can get a loan and use it to pay off all those credit lines. You can often get debt consolidation loans with a lower interest rate as well. Either way, they can definitely make your life a lot simpler.

Tips for Comparing the Best Debt Consolidation Loans for Bad Credit

These tips can help you compare the best debt consolidation loans and find an offer that may be right for you.

  • Compare interest rates: When shopping for debt consolidation loans, always compare the interest rates of different lenders. Look for the lowest rates possible.
  • Understand the fees: Some lenders may charge fees for processing your loan. Understand what fees you will be charged before you sign up for the loan.
  • Read the terms and conditions: Make sure you read and understand all the terms and conditions of the loan before signing the agreement.
  • Ask questions: If you don’t understand something or have any questions, make sure to ask the lender before signing the agreement.

Where to Get a Debt Consolidation Loan with Bad Credit

There are many bad credit debt consolidation loans available to people who have a low credit score. However, finding the right one for you will require some research. Here are some good places to begin your search.

Online Lenders

Online lenders are a great source for debt consolidation loans with bad credit. It’s easier to get a loan from an online lender because they don’t have the overhead costs associated with brick-and-mortar lenders. Online lenders are available 24/7 and as you saw above, many of them specialize in lending to bad credit borrowers.

Credit Unions and Local Banks

Local banks and credit unions are probably not the first places to look for debt consolidation loans with bad credit. They tend to be strict on whom they will help. However, if you have a good relationship with the bank or credit union, it may be worth a try.

How to Qualify for a Debt Consolidation Loan

Lenders have different requirements for debt consolidation loans. However, typically, you should be at least 18 years of age and not be involved in bankruptcy or foreclosure proceedings.

Additionally, lenders will look at your credit score, income, and debt-to-income (DTI) ratio to evaluate your ability to repay the loan. Generally, a credit score of 650 or higher is recommended. However, some lenders may accept scores as low as 600.

Your debt-to-income ratio should be 45% or lower. Otherwise, you may be charged a higher interest rate to account for the higher risk of default.

How Debt Consolidation Can Improve Your Credit Score

Taking out any loan is easier when you have good credit. But, you can also get a debt consolidation loan with bad credit if you find the right lender. And taking this route may actually help you improve your credit score in the long run.

Applying for a new line of credit will result in a hard inquiry on your credit report, and this could lower your credit score temporary. However, debt consolidation loans make it much easier to manage your debt because you only have one payment to manage each month. It’s a lot easier to keep track of.

This can translate to on-time payments and the ability to pay more each time than the minimum. The positive payment history that comes from making on-time monthly payments will help you boost your credit scores.

Lower Your Credit Utilization Ratio

These days, most of us have multiple credit lines open, including high-interest, unsecured debt like retail credit card debt. Although these products seem to provide financial relief in the short term, over time, they just add to a sticky situation.

You fall further and further behind, dishing out tons of cash to keep up with all the interest. However, debt consolidation loans allow you to have more wiggle room to make larger payments. And it’ll certainly be easier to keep track of how much you owe and when those payments are due.

Reducing credit card debt and making on-time payments reported to the credit bureaus will boost your credit score over time. This makes consolidating your debt one of the best strategies for those trying to build or repair their credit history!

Alternatives to Debt Consolidation Loans for Bad Credit

If you struggle with bad credit, then qualifying for debt consolidation loans may be tricky. If you find yourself in this situation, here are a few alternatives you can consider:

Balance Transfer Card

Using a balance transfer card is another way to consolidate debt. You move your high-interest credit card debt to a new card with a limited-time 0% APR. Some cards offer these introductory APRs for a year to 18 months.

However, you will typically need a good credit score to qualify, and you’ll have to pay a one-time transfer fee. And this solution only works if you’re able to pay down the debt before the introductory APR offer goes away. Otherwise, you may just end up in the same situation you’re in now.

Negotiate Repayment Terms

Your current lenders only make money if you continue making your payments, so the last thing they want is for you to default on the loan.

So if you’re strapped financially and don’t qualify for a debt consolidation loan, you may want to reach out to your current lenders to negotiate the repayment terms. They may be willing to work with you and adjust the payments so they’re more manageable.

Credit Counseling

Another option you can consider is working with a credit counseling agency. These nonprofit companies work with borrowers like you to help reduce the amount you’re paying every month.

They help you craft a debt management plan to help you get out of debt faster, and their service is usually free. So, if you aren’t making any progress paying down debt on your own, you may want to work with a credit counseling agency.

Home Equity Loan

If you have equity in your home, you may qualify for a home equity loan or home equity line of credit (HELOC) to pay off high-interest debt. Since the loan is secured by your home, you may qualify for a lower interest rate. However, it can also be very risky. If you default on a secured loan, it could result in foreclosure.

File for Bankruptcy

And finally, if you’ve completely run out of options, you can always consider filing for bankruptcy. Obviously, this isn’t anyone’s first choice. But if you’re drowning in debt with no way to get out, this is an alternative. Your credit score will take a hit for many years, but it is possible to start over and rebuild your financial future.

Frequently Asked Questions

What is a debt consolidation loan for bad credit?

A debt consolidation loan for bad credit is a loan that allows you to pay off multiple outstanding debts with one loan. They typically come with a lower interest rate or with more favorable terms.

What credit score do I need for a debt consolidation loan?

Most lenders require a minimum credit score of at least 580 to qualify for a debt consolidation loan. However, having a higher credit score can help you qualify for a lower interest rate, which can save you money in the long run.

What will my interest rate be for a debt consolidation loan for bad credit?

Interest rates for debt consolidation loans for bad credit will depend on your credit history and other factors. Generally, interest rates will be higher than those for good credit borrowers, but they can still be competitive.

Are there any fees associated with debt consolidation loans?

Yes, there may be fees associated with debt consolidation loans. These fees include origination fees, prepayment penalties, and other fees. Be sure to read the loan agreement carefully and ask questions to make sure you understand all the fees associated with the loan.

Can I consolidate multiple debts with a debt consolidation loan?

Yes, you can consolidate multiple debts with debt consolidation loans. This can help you simplify your debt repayment and possibly lower your interest rates and monthly payments.

Will a debt consolidation loan help improve my credit score?

A debt consolidation loan can help improve your credit score if you make your payments on time and manage your loan responsibly.

What should I do if I am denied a debt consolidation loan?

If you are denied a debt consolidation loan, it may be best to speak with a credit counselor to discuss other options. A credit counselor can help you create a budget and create a plan to pay off your debts.

Jamie Cattanach
Meet the author

Jamie Cattanach is a freelance writer whose work has been featured at Fodor's, Yahoo, SELF, The Motley Fool, Roads & Kingdoms, and other outlets.