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If you have bad credit, a debt consolidation loan can help combine your debt into a single monthly payment. Borrowers can reduce their monthly payments by keeping costs low and opting for longer repayment terms.

In 2024, the best debt consolidation loans for bad credit offer borrowers enough financing to combine their loans with low interest rates and flexible loan terms. We compared personal loan lenders based on whether each allows co-signers and whether direct lender payoff is available. Here are the best lenders who offer debt consolidation loans.

Best debt consolidation loans for bad credit

Why trust our personal loan experts

Our team of experts evaluated hundreds of personal loan products and analyzed thousands of data points to help you find the best fit for your situation. We use a data-driven methodology to determine each rating. Advertisers do not influence our editorial content. You can read more about our methodology below.

  • 27 personal loan lenders reviewed.
  • 270 data points analyzed.
  • 6-stage fact-checking process.

Compare the best debt consolidation loans for bad credit

 INTEREST RATESLOAN AMOUNTSMIN. CREDIT SCOREACCEPTS CO-SIGNERS?
Upgrade
8.49% to 35.99%
$1,000 to $50,000
No minimum

No
(but can apply with a joint applicant)

LendingPoint
7.99% to 35.99%
$2,000 to $36,500
600
No
Prosper
8.99% to 35.99%
$2,000 to $50,000
560
No
LendingClub
8.98% to 35.99%
$1,000 to $40,000
No minimum

No
(but co-borrowers are permitted)

Oportun
34.95% to 35.99% (depending on your state and loan type)
$300 to $18,500 (depending on your state and loan type) (larger loan amounts require collateral)
No minimum

Yes
(in some situations)

Upstart
7.8% to 35.99%
$1,000 to $50,000
300
No
Avant
9.95% to 35.99%
$2,000 to $35,000
580
No

All rates include autopay discounts where noted by the lender and are accurate as of June 11, 2024.

Methodology

Our expert writers and editors have reviewed and researched multiple lenders to help you find the best debt consolidation loan for bad credit. Out of all the lenders considered, the seven that made our list excelled in areas across the following categories (with weightings): loan cost (25%), loan details (15%), eligibility and accessibility (35%), customer service (15%) and direct creditor payment (10%).

Within each major category, we considered several characteristics, including APR ranges, prepayment penalties, maximum loan amounts and terms, minimum credit score requirements and co-signer acceptance. We also evaluated each provider’s customer support options and customer reviews.

Why some lenders didn’t make the cut

Of the personal loan lenders that we reviewed, only a fraction made the cut. The lenders that didn’t have high enough scores to be included, received lower ratings due to having stricter credit score requirements, limited customer service options and bad customer reviews as well as not allowing co-signers.

What is a debt consolidation loan?

A debt consolidation loan is a type of personal loan used to pay off existing debts, such as high-interest credit card debt. This leaves you with just one loan and a single payment to manage, which can help to simplify repayment. 

Additionally, debt consolidation loans can offer a definitive timeline for paying off your debts. Rather than juggling multiple debts with differing repayment schedules, a debt consolidation loan provides a precise end date to your repayment plan. It’s important to note, however, that the success of debt consolidation depends heavily on disciplined budgeting and consistent payments.

How do debt consolidation loans work?

A debt consolidation loan is a type of personal loan used to pay off existing debts, such as high-interest credit card debt. This leaves you with just one loan and a single payment to manage, which can help to simplify repayment. Personal loans also typically come with fixed interest rates, meaning your payments will stay the same throughout your repayment term.

Depending on your credit, you might also qualify for a better interest rate on a debt consolidation loan compared to what you’ve been paying. This could save you money on interest and possibly help you pay off your debt faster. You could also opt to extend your repayment term if you want to reduce your monthly payments — though keep in mind that this means you’ll pay more interest over time.

How to compare debt consolidation loans

There are several key factors that will impact both the cost and the general effectiveness of a debt consolidation strategy. Here are some of these important points to keep in mind to effectively compare debt consolidation loans:

  • Interest rates: This can be the most crucial factor to consider. A lower interest rate means you’ll pay less over the lifespan of your loan. It’s beneficial to seek out loans with the lowest rates your credit score will allow. Remember, if the interest rate isn’t significantly lower than what you currently pay, the consolidation might not be worth it. 
  • Loan amounts: Depending on the lender, personal loans for debt consolidation can be as small as a few hundred dollars up to $100,000. You’ll want to consider how much debt you want to consolidate to see which lenders will suit your needs. Keep in mind that you might not qualify for the largest loan amounts if you have bad credit.
  • Repayment terms: Debt consolidation loans typically have repayment terms from one to seven years, depending on the lender. While a longer term means lower monthly payments, you’ll be in debt for longer and will pay more in interest. In general, it’s best to choose the shortest term you can comfortably afford so you can avoid both excessive interest and extending your debt for too long. Lenders also often lower rates on loans with shorter terms.
  • Fees: Some lenders charge fees that can impact the overall cost of your loan. For example, a debt consolidation loan can come with an origination fee, which is a percentage of the loan amount that’s taken out before disbursement. 
  • Eligibility requirements: While many lenders require good to excellent credit, not all of them impose the same requirements. Some are more lenient with borrowers who have poor or fair credit scores. These lenders might, however, charge higher interest rates to offset the risk. 
  • Lender reputation: The last thing you want is to solve one financial problem only to fall into the hands of a predatory lender, so be sure to research all of the lenders you’re considering to identify any red flags before committing to a loan. You can read online reviews on sites like the Better Business Bureau (BBB) and Trustpilot to ensure that you work with a reputable company. 

Struggling to manage debt? Compare payoff plans from the best debt management companies.

How to get a debt consolidation loan with bad credit

Qualifying for a debt consolidation loan can be challenging when you have bad credit. However, climbing out of debt with a debt consolidation loan is possible even with a less-than-perfect credit score. Here are the steps to get a debt consolidation loan with bad credit:

  1. Check your credit. Your credit is a significant factor that lenders consider when approving loans. So before you apply, review your credit reports and check your credit score to see where you stand. If your score is low and your debt consolidation can wait, you might consider working to improve it before applying in the future. 
  2. Research and compare lenders. Make sure to weigh your options from different personal loan lenders to find the one that best suits your circumstances. Consider factors like interest rates, repayment terms and fees as well as eligibility requirements. Many lenders let you pre-qualify with only a soft credit check that won’t hurt your credit score, which can give you an idea of what rate and terms you could get approved for should you apply.
  3. Pick a loan option and apply. After you’ve compared lenders, pick the loan option that best suits your debt consolidation strategy. You’ll then need to submit a formal application and agree to a hard credit pull. Be prepared to provide any required documentation, such as tax returns or pay stubs.
  4. Get your funds and pay off your debts. If you’re approved, the lender will have you sign loan paperwork before disbursing the funds. You might also have the option to have the lender send the money directly to your creditors, which can make the process easier. 

Tip: If you’re struggling to qualify for an unsecured debt consolidation loan due to bad credit, you might look into getting a secured loan instead. This type of loan is secured by collateral, such as a car. Because this is less risky for the lender, you could have an easier time qualifying even if you have less-than-stellar credit. However, if you fail to make your payments, you risk losing the asset used as collateral.

You could also apply for a secured or unsecured loan with a creditworthy co-signer or joint applicant to boost your chances of approval. This could also get you a lower interest rate than you’d get on your own. Note that while a co-signer will be liable for the loan if the primary borrower fails to make payments, a joint applicant is equally responsible for repayment from the start of the term — so consider this option carefully.

Pros and cons of consolidating debt

Pros

  • Leaves you with just a single loan and payment to manage.
  • Might get you a lower interest rate or reduced monthly payment.
  • Could help you pay off debt faster.

Cons

  • Might come with fees, depending on the lender.
  • Could end up paying more in interest.
  • Doesn’t solve the financial habits that might have resulted in excessive debt.

Alternatives to debt consolidation loans

If a personal loan doesn’t seem right for you, there are also other ways to consolidate debt. Here are a few options to consider:

  • Balance transfer credit card: With a balance transfer, you’ll simply move your balance from another credit card to a new one — preferably with better terms. Many credit cards offer an 0% APR introductory period, which typically also covers balance transfers though might still come with a fee of 3% to 5% of the consolidated amount. Just keep in mind that if you don’t pay off the card before this promotional period ends, you could be stuck paying hefty interest charges.
  • Home equity loan: If you’re a homeowner, you could tap into your equity with a home equity loan. Similar to a personal loan, you’ll receive a lump sum to use how you’d like, such as to consolidate debt. Because a home equity loan is secured by your house and is therefore less risky to the lender, you’ll likely get a lower interest rate compared to what you’d get on a personal loan. However, you also risk losing your home if you don’t keep up with your payments.
  • Home equity line of credit: Another way to access your home equity is with a home equity line of credit (HELOC). Unlike a home equity loan, a HELOC provides you with a revolving credit line that you can repeatedly draw on and pay off. Just remember that you’ll be using your home as collateral, which could lead to foreclosure if you can’t make your payments.

Frequently asked questions (FAQs)

The exact credit score needed for debt consolidation depends on the specific lender. In general, however, lenders prefer borrowers who have a good or excellent credit score (typically 670 or higher). If you have a lower-than-average credit score, you may need to provide additional documentation to qualify. 

Some lenders offer debt consolidation options to those with low or bad credit scores; however, these loans usually come with higher interest rates. Ultimately, shopping around and comparing offers from different lenders is best before deciding.

You can apply for a personal loan with bad credit. Many lenders offer debt consolidation loans to borrowers with less-than-perfect credit. Remember, however, that you’ll likely pay higher interest rates and may pay more in fees than with traditional loans.

Consider applying for secured loans or seeking the help of a creditworthy co-signer to increase your chances of approval. If you can wait to consolidate your debt, work on improving your credit score before applying.

When you apply for a debt consolidation loan, the lender will perform a hard credit check to determine whether to approve you. This could cause a slight, temporary drop in your credit score — usually by five points or less.

Additionally, consolidating your debt could end up helping your credit score in the long run. For example, if you make all of your payments on time or are able to diversify your credit mix, you see a boost in your credit score. Your score might also improve if paying down revolving your credit lines (such as credit cards and lines of credit) reduces your credit utilization, which compares the amount of available credit you’ve used to your total credit limits.

Debt consolidation can be a good idea if you’re juggling multiple high-interest debts as it can simplify payments and potentially reduce your interest costs. However, using a debt consolidation loan effectively requires disciplined budgeting and consistent repayments. 

Carefully research and compare loan options with as many lenders as possible to ensure the benefits outweigh any potential drawbacks.

The approval time for a consolidation loan varies by lender and your financial situation, but it generally ranges from a few minutes to a few days. Online lenders could provide nearly instant approval while traditional banks might take several days to review and approve your application. 

If you’re approved, you can typically expect to get your funds within a week, depending on the lender.

Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.

Blueprint has an advertiser disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.

Kiah Treece

BLUEPRINT

Kiah Treece is a small business owner and former attorney with extensive experience in business and consumer finance. She focuses on demystifying debt so individuals and business owners can take control of their finances. Her work has been published on Forbes Advisor, Investopedia, The Spruce, Rolling Stone, Treehugger and more.

Jamie Young

BLUEPRINT

Jamie Young is Lead Editor of loans and mortgages at USA TODAY Blueprint. She has been writing and editing professionally for 12 years. Previously, she worked for Forbes Advisor, Credible, LendingTree, Student Loan Hero, and GOBankingRates. Her work has also appeared on some of the best-known media outlets including Yahoo, Fox Business, Time, CBS News, AOL, MSN, and more. Jamie is passionate about finance, technology, and the Oxford comma. In her free time, she likes to game, play with her two crazy cats (Detective Snoop and his girl Friday), and try to keep up with her ever-growing plant collection.

Ashley Harrison is a USA TODAY Blueprint loans and mortgages deputy editor who has worked in the online finance space since 2017. She’s passionate about creating helpful content that makes complicated financial topics easy to understand. She has previously worked at Forbes Advisor, Credible, LendingTree and Student Loan Hero. Her work has appeared on Fox Business and Yahoo. Ashley is also an artist and massive horror fan who had her short story “The Box” produced by the award-winning NoSleep Podcast. In her free time, she likes to draw, play video games, and hang out with her black cats, Salem and Binx.

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