The following lenders, which accept borrowers with bad credit, were chosen from the MagnifyMoney (a LendingTree subsidiary) marketplace. The marketplace defines poor credit as 640 or lower.
|Bad-credit debt consolidation loans
|Minimum credit score requirement
||9.99% – 35.99%
||5.99% – 25.05%
||8.13% – 35.99%
||24 to 48 months
||36 or 60 months
||36 & 60 months
||$2,000 – $25,000
||$4,000 – $25,000
||$1,000 – $50,000
||0.00% - 6.00%
||1.00% - 5.00%
||Up to 8.00%
Taking out a debt consolidation loan with bad credit
- Look for ways to improve your credit score. If you need a debt consolidation loan immediately, skip to the next step. But if you have bad credit and can delay taking out a loan, making on-time payments and lowering your credit utilization ratio are among the steps you could take to boost your score, possibly opening up additional lender options.
- Shop for the best lender for you. If you have bad credit, the amount of lenders willing to offer a loan will likely be limited. That doesn’t mean you’re out of options. Check minimum credit score requirements through potential lenders. Search for “bad-credit debt consolidation loans” or similar terms to find offerings that may be more tailored to you.
- Watch out for predatory lenders. Having bad credit can make you an easy target for lenders. But that doesn’t mean you should settle for the first debt consolidation loan you come across regardless of the interest rate being offered. Check potential lenders’ websites for mentions of fees that could make your interest rate skyrocket.
- Do the math. Use our debt consolidation calculator to see whether a loan will save you money. Don’t forget to factor in the new loan’s interest rate, origination fee and other costs.
- Apply for prequalification. Applying for prequalification is important, especially for bad-credit borrowers. Prequalification generally involves a soft credit inquiry, which means your credit score won’t be affected. If you have bad credit, even losing a point or two from submitting an application — and the resulting hard credit inquiry — could negatively affect your chances of getting the loan.
- Consider a cosigner. This could be a great option for borrowers with bad credit who have limited loan options. Your cosigner would be responsible for paying back the debt consolidation loan if you were unable to make payments. Depending on the lender, this could be your only chance of landing a loan.
- Fill out a formal application. As noted, this will involve a hard inquiry and could slightly impact your credit score. If your credit score is already low, you want to avoid risks, so it’s best to limit the formal application to your top loan choice. If you do find that you need to apply to multiple lenders, make sure to do so within the same 14-day window so that it’s viewed as one inquiry on your credit report. When you reach this stage, have documents ready that can show your ability to repay, such as tax returns and pay stubs. This could be a way to prove your creditworthiness to the lender outside your score.
Is debt consolidation right for you?
Debt consolidation isn’t right for everyone, so here are three questions you should ask yourself before you start filling out loan applications.
- Will the interest rate you receive be worth it? Before you consolidate, run the numbers and make sure a new loan is beneficial to you. If you have serious credit problems, you may have trouble qualifying for a decent interest rate. Our debt consolidation calculator can help you compare the interest rates on your existing accounts with available debt management options, based on your credit. When you compare financing options side by side, it’s easy to see if consolidation is worthwhile.
- 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 debt payoff plan, a consolidation loan could fit into the process nicely.
- Can you avoid new debt? The last thing you want to do is pay off something with a consolidation loan and start racking up charges. That’s a recipe for financial disaster. You need to be 100% committed to avoiding new debt or consolidation could snowball into a bigger money and credit problem down the road.
Pros and cons of debt consolidation
When you’re considering debt consolidation, it’s essential to look at the advantages and drawbacks. Until you weigh both the pros and cons of various debt consolidation options, you won’t know if a new loan is a good fit for you.