Debt Consolidation Loans for Bad Credit: Our Top 5 Picks

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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

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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.

  • Loans from $500 – $10,000
  • APR: 5.99% – 35.99%
  • Loan Term: 3 – 36 months

2. Upgrade

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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.

  • Loans from $1,000 – $50,000
  • APR: 7.99% – 35.89%
  • Loan Term: 36 – 60 months


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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.

  • Loans from $500 – $35,000
  • APR: 5.99% – 35.99%
  • Loan Term: 3 – 72 months

4. LendingClub

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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.

  • Loans up to $40,000
  • APR: 6.95% – 35.89%
  • Loan Term: 36 – 60 months

5. OneMain Financial

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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.

  • Loans from $1,500 – $30,000
  • APR: 16.05% – 35.99%
  • Loan Term: 24, 36, 48 or 60 months

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, but it is important that you do some research and find the right one for you. 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 a debt consolidation loan with bad credit. They tend to be strict on whom they will help, but if you have a good relationship with the bank or credit union, it may be worth a try.

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 can already create confusion and make it really easy to accidentally miss a payment (or find yourself desperately moving money around between your accounts to make everything work). But along with just being a logistical hassle, having that many credit lines can be a serious drain 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. If you’re only paying the minimum each month, you’re actually spending a lot 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 debt consolidation loan and use it to pay off all those credit lines. You can often get a debt consolidation loan with a lower interest rate as well. Either way, getting a debt consolidation loan can definitely make your life a lot simpler.

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. With a debt consolidation loan, you may find you 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.

The more you dial down your credit card debt and have on-time payments reported to the credit bureaus, the better your credit score will get over time. This makes consolidating your debt one of the best strategies for those trying to build or repair their credit history!

Debt Consolidation Loan Alternatives

If you struggle with bad credit, then qualifying for a debt consolidation loan 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.

If you don’t seem to be making any progress paying down debt on your own, working with a credit counseling agency may be a good choice.

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’re 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.

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.