Debt Consolidation Loans With Bad Credit:
How to Get One

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By Michelle Lambright Black

Debt consolidation combines multiple debts into one, ideally with a lower interest rate. It may help you pay down your debts faster if you manage the process wisely. Qualifying for a debt consolidation loan with bad credit can be a challenge, but there are options. Just pay close attention to factors that could affect your cost of borrowing, such as interest rate, fees and loan duration.

3 debt consolidation loans for bad credit
Taking out a debt consolidation loan with bad credit
Is debt consolidation right for you?
Pros and cons of debt consolidation
3 alternatives to a debt consolidation loan

3 debt consolidation loans for bad credit

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 requirement585600620
APR15.49% - 35.99%5.99% - 25.05%7.98% - 35.99%
Terms24 to 48 months36 or 60 months36 & 60 months
Loan amount$2,000 - $25,000$4,000 - $25,000$1,000 - $50,000
Origination fee0.00% - 6.00%1.00% - 5.00%Up to 8.00%
See OffersSee OffersSee Offers

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.

  1. 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.
  2. 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.
  3. 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.


  • May reduce the size — and number — of monthly payments
  • May lower interest rates
  • Could improve your credit score if credit utilization goes down


  • Getting a good rate can be difficult with bad credit
  • You may not qualify for enough to pay off all debts
  • New hard inquiry might negatively impact an already bad credit score

3 alternatives to a debt consolidation loan

Home equity loan/HELOC

Homeowners may be able to tap into the equity in their homes when they need to borrow money. Because the loan is secured by your house, the risk is lower for lenders, and less risk often means a lower interest rate for you.

But putting up your home as collateral is tricky. If you fail to pay your home equity loan as agreed, you could risk losing the roof over your head.

Compare Home Equity Loan Rates

Debt management plan (DMP)

A certified credit counselor may be able to negotiate lower interest rates and fees with your creditors on your behalf. Under this plan, you consolidate your payments into one.

However, the service often isn’t free. Most credit counselors charge monthly fees if you enroll in a debt management plan. And they are not a quick fix, as they usually take three to five years to complete.

Learn More About Debt Management Plans


Bankruptcy may help you cancel certain debts or force your creditors to accept a repayment plan you can afford. From a credit perspective, it is often a nuclear option.

Filing bankruptcy can damage your credit for years and may make it difficult to qualify for certain types of financing in the future. But it is possible to rebuild credit after bankruptcy. You will need the right plan, patience and consistent follow-through.

See Your Debt Relief Options


Our selection of debt consolidation loan lenders for bad credit was based on offers listed on MagnifyMoney’s personal loan marketplace. Lenders were chosen on Dec. 18, 2019, assuming:

  • Credit score of poor (below 640)
  • Loan amount of $5,000
  • ZIP code: 11220

Lenders were chosen by their credit score requirement and APR ranges. Lenders who do not specify credit score requirements on their website were excluded when assessing lenders for borrowers with poor credit.

Compare Debt Consolidation Loans