Debt Consolidation Loans for Bad Credit in April 2024

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How Does LendingTree Get Paid?

LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
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Written by Alex Cook | Edited by Jessica Sain-Baird | Reviewed March 28, 2024

Upstart logo

Minimum credit score300
APR range7.80% - 35.99%
Repayment terms36 and 60 months
Loan amounts$1,000 to $50,000
Origination fee0.00% - 12.00%
ProsCons

 Borrowers can take out up to $50,000

 Can receive funds within one business day of approval

 Can apply for a second loan if you already have one

 Restrictive loan terms of 36 and 60 months

 High maximum APRs

 Doesn’t offer joint loans

Borrowers interested in Upstart can borrow up to $50,000 and receive funds through its loan marketplace within one business day after they’ve been approved. Unfortunately, if your credit doesn’t quite meet the requirements, Upstart doesn’t offer joint loans.

Minimum credit score660
APR range7.99% - 35.99%
Repayment terms24 to 72 months
Loan amounts$2,000 to $36,500
Origination feeUp to 10%
ProsCons

 Funds deposited as soon as next business day

 Flexible repayment terms

 Annual income requirement of only $35,000

 Loans not available in Nevada or West Virginia

 Doesn’t offer joint or cosigned loans

 APR rates can get as high as 35.99%

LendingPoint gives consumers with scores of 660 and above an opportunity to qualify for a debt consolidation loan. However, keep in mind that if you have a lower credit score, you most likely won’t be eligible for LendingPoint’s lower APR rates.

Upgrade logo

Minimum credit score580
APR range8.49% - 35.99% (with autopay)
Repayment terms24 to 84 months
Loan amounts$1,000 to $50,000
Origination fee1.85% - 9.99%
ProsCons

 Receive funds within a day of approval

 Among the highest maximum loan amounts on list

 Offers joint applications and secured loans

 High maximum APR

 Charges an origination fee

 Charges late fees

If your credit score isn’t quite up to par, Upgrade offers joint loan applications as well as secured loans. Consumers can apply for up to $50,000 and receive their money within one business day after being approved.

Minimum credit score560
APR range8.99% - 35.99%
Repayment terms24 to 60 months
Loan amounts$2,000 to $50,000
Origination fee1.00% - 7.99%
ProsCons

 Allows co-applicants

 Lower credit score requirements

 Higher maximum loan size

 Borrowers are charged an origination fee

 High maximum APR for some borrowers

 Charges late payment fees

Prosper is a peer-to-peer loan marketplace that funds loans quickly (as soon as one business day, in some cases). Relative to lending platforms, it has a wide range of possible APRs — but look out for origination fees, which take a small percentage of the loan upfront.

Minimum credit score600
APR range9.57% - 35.99%
Repayment terms24 to 60 months
Loan amounts$1,000 to $40,000
Origination fee3.00% - 8.00%
ProsCons

 Option to change your due date one time

 Option to add a co-borrower

 15-day grace period for payments

 Loan amounts only up to $40,000

 High maximum APR

 Charges origination and late payment fees

Not only does LendingClub pay your creditors directly, but you may also receive your funds within 48 hours. Watch out for origination fees, which are deducted from the amount of money you receive from the lender.

Avant logo

Minimum credit score580
APR range9.95% - 35.99%
Repayment terms12 to 60 months
Loan amounts$2,000 to $35,000
Origination feeUp to 9.99%
ProsCons

 Receive funds as soon as the next business day

 Lower origination fee compared to other lenders

 Reports to all three credit bureaus

 Low maximum borrowing amount

 Charges an origination fee

 Charges late fee and dishonored payment fee

As Avant reports to all three credit bureaus — Equifax, Experian and TransUnion — taking out a debt consolidation loan through this lender could help you increase your creditworthiness. Avant also funds your loan as quickly as the next business day so you won’t be waiting around very long.

Happy Money logo

Minimum credit score640
APR range11.72% - 17.99%
Repayment terms24 to 60 months
Loan amounts$5,000 to $40,000
Origination fee1.50% - 5.50%
ProsCons

 Can opt to pay creditors directly

 No application or late payment fees

 Consolidation loans specifically geared toward credit card debt

 Funding time typically three to six business days

 No joint applications

 Loans not available in Massachusetts or Nevada


Happy Money is transparent about its debt consolidation loan requirements, making the information easy to find on its website. For a Happy Money loan approval, however, you’ll need to make sure you have no delinquent payments and a credit score of at least 640. Happy Money doesn’t charge application or late fees, and its loans are specifically for those wanting to consolidate credit card debt.

Minimum credit scoreNot specified
APR range18.00% - 35.99%
Repayment terms24 to 60 months
Loan amounts$1,500 to $20,000
Origination fee1.00% - 10.00%
ProsCons

 Offers both secured and unsecured loans

 Flexible repayment terms of 24 to 60 months

 Physical branches located throughout the country

 Low maximum loan amount

 High origination fees

 High interest rates

OneMain Financial may be best for those seeking small loans, as its maximum loan amount is $20,000. This lender’s APR rates are also higher than many of the other lenders on this list — but they may be significantly lower than rates offered by predatory lenders.

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What is a debt consolidation loan for bad credit?

A debt consolidation loan for bad credit is a personal loan that you use to roll (or consolidate) many debts into one. These are typically unsecured loans, which means they don’t require collateral.

For many, the goal is to get a lower interest rate on a debt consolidation loan than they’re currently paying across their multiple loans. This may be possible even if you have a less-than-perfect history, as some lenders specialize in bad credit.

Aside from lower rates, consolidating can also help you reduce the number of debt payments you make each month. And if you choose a shorter loan term, you can pay off your debt in a shorter amount of time.

Pros and cons of a debt consolidation loan for bad credit

If you have bad credit, review these pros and cons before determining if a debt consolidation loan is right for you.

ProsCons

 May offer lower interest rates than what you’re currently paying

 Can reduce the size — and number — of monthly payments

 Could improve your credit score if credit utilization goes down

 Getting a good APR can be difficult with bad credit

 You may not qualify for a large enough loan to pay off all debts

 New hard inquiry can negatively impact an already bad credit score

Will the interest rate you receive be worth it? If you have serious credit problems, you’ll likely have trouble qualifying for a decent APR. Compare the interest rates on your existing debts with possible rates for debt consolidation loans. Loan prequalification lets you compare estimated APRs without hurting your credit score.

Do you have a debt payoff plan? Consolidation alone usually isn’t enough to help you achieve freedom from debt. But if you’re willing to follow a plan for how to get out of debt, a consolidation loan could help.

Can you avoid new debt? You don’t want to pay off your current debts with a consolidation loan and start racking up more debt. You’ll need to be 100% committed to avoiding new debt, or consolidation could snowball into a bigger money and credit problem down the road.

How to qualify for a debt consolidation loan if you have bad credit

  1. Check your credit score. You can check your credit score with LendingTree Spring. You can also request a free copy of your credit report from all three credit bureaus at AnnualCreditReport.com.
  2. Research lenders in your credit band. If you have bad credit, many lenders might not be willing to extend you a loan — but that doesn’t mean you’re out of options. Check minimum credit score requirements for potential lenders.
  3. Check with local credit unions. A credit union personal loan may benefit those who have bad credit when it comes to debt consolidation. Credit unions are not-for-profit, member-owned financial institutions that have membership requirements typically based on where you live or work.
  4. Consider a cosigner. Bad credit borrowers may consider getting a personal loan with a cosigner by enlisting the help of a friend or family member who has good credit and would be willing to cosign on a loan.
    A cosigner is a borrower who takes out a loan with you and would be responsible for paying back the debt consolidation loan if you’re unable to make payments. If you’re looking for a personal loan with cosigner, make sure to research lenders that allow cosigners, because not all do.
  5. Apply for prequalification. Prequalification involves a soft credit inquiry, so you can check your eligibility and the terms you may be offered without affecting your credit score. If you have bad credit, even losing a few points from a hard credit inquiry could affect your chances of getting the loan.
  6. Formally apply for the loan. This will involve a hard credit inquiry and could slightly (but temporarily) impact your credit score. When you reach this stage of the application process, be prepared with documents that show your ability to repay debt, such as tax returns and pay stubs.
  7. Use the loan funds to pay off other debts. If approved, the lender will typically deposit the money into your bank account within a few days. You can use this money to pay off your debts, like credit cards and payday loans.

Watch out for predatory lenders. Having bad credit can make you an easy target for predatory lenders that offer payday loans or car title loans. These types of loans don’t typically require a credit check, but they come with sky-high APRs and short repayment terms that can trap you in a cycle of debt.

Alternatives to consolidating debt with bad credit

Unsecured debt consolidation loans aren’t your only option for getting out of debt — here are a few alternatives.

Credit counseling or debt management plan

If you’ve fallen into debt, you could contact a nonprofit credit counseling agency that helps people negotiate with creditors and creates a debt management plan. Those debt management plans simplify your monthly debt payment, much like a consolidation loan does.

Credit counselors often are an affordable option relative to financing your debt, but make sure you find a credit counselor that meets your specific needs. They can also help you create a budget and teach money management skills.

Home equity loan

Sometimes you can find better terms on debt financing if you can take out a secured loan, which uses collateral. With a home equity loan or home equity line of credit (HELOC), you can use your home to finance your new loan — but watch out, because nonpayment could mean foreclosure. Home equity loans tend to have better interest rates than debt consolidation loans.

Other secured loan

Home equity loans are one of many types of secured loans, which include collateral like cars, bank accounts and other valuable items. For debt consolidation, loans financed with cars or funds in a savings or investment account might have more favorable terms — but again, they come with serious risk. For example, failure to make debt payments on an auto title loan might make you lose your car.

401(k) loan

Some companies let you borrow from your 401(k). Interest rates and fees tend to be lower, but you can only borrow up to half of the vested amount or $50,000 (if the vested amount is higher). You might also have to pay the balance in full if you leave your job.

Balance transfer cards for credit card debt

Financing debt with a balance transfer credit will help you avoid paying further interest in the short-run and could wind up saving you some money. If you’re able to pay off the debt during the introductory period, which lasts between a year or two, you’ll pay 0% APR — but if you carry a balance past that, you’ll have to pay back interest and potential fees.

What to do if you don’t qualify for another loan

If you can’t get approved for a debt consolidation loan, there are more strategies for reaching your financial goals.

Debt management strategies

With discipline and a sensible debt payoff plan, you could potentially be able to pay off your existing debt yourself. Create a budget, rein in some expenses and try to use extra money to pay off the debt. Some debt payoff techniques focus on paying off the debt with the highest interest (debt avalanche) or smallest balance (debt snowball).

Improve your credit score

The best way to improve your chances of getting a new loan is to boost your credit score. Improving your score may take time, especially if you have a track record of missed payments, but steady, responsible credit usage can help bring your score back up. Start by making on-time payments, improving your credit utilization ratio or disputing possible errors.

Debt settlement

Debt settlement services will significantly hurt your credit score by encouraging you to miss payments and avoid contacting creditors while the company negotiates with them. While they can reduce your overall debt burden, creditors don’t have to work with them, and even if they do, you’ll still have to pay fees as a percentage of the starting debt.

Bankruptcy

Only to be considered as an option of last resort, bankruptcy is a legal process in which you can discharge certain forms of debt under certain conditions, some of which may allow creditors to repossess assets. Bankruptcies will also damage your credit score and future ability to borrow money.

How we chose our picks for best debt consolidation loans for bad credit

We reviewed more than 25 lenders that offer personal loans to determine the best debt consolidation lenders for bad credit. To make our list, lenders must offer competitive annual percentage rates (APRs). From there, we prioritize lenders based on the following factors:

  • Accessibility: Lenders are ranked higher if their personal loans are available to more people and require fewer conditions. This may include lower credit requirements, wider geographic availability, faster funding and easier and more transparent prequalification and application processes.
  • Rates and terms: We prioritize lenders with more competitive fixed rates, fewer fees and greater options for repayment terms, loan amounts and APR discounts.
  • Repayment experience: For starters, we consider each lender’s reputation and business practices. We also favor lenders that report to all major credit bureaus, offer reliable customer service and provide any unique perks to customers, like free wealth coaching.

LendingTree reviews and fact-checks our top picks on a monthly basis.

Frequently asked questions

If you’re able to keep up with your loan payments, debt consolidation loans may actually help with your credit score. As you pay off your debt, you’ll reduce your debt-to-income ratio and demonstrate to creditors that you can make timely payments. Over time, this can boost your credit score.

Different lenders have different credit score requirements. Some will require that you have a good credit score while others will accept fair credit. The lower your credit score, the higher your APR rates may be.

If you want to apply for a debt consolidation loan but you have a lot of debt, getting approved may be difficult, but not impossible. For starters, check your credit score to see where you stand and work on cutting down on your debt. You can do this by using methods like the debt snowball method or the debt avalanche method.