How to Get Debt Consolidation Loans With Bad Credit

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LendingTree is compensated by companies on this site and this compensation may impact how and where offers appears 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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Debt consolidation combines multiple debts into one, ideally with a lower interest rate. It may help you pay down your debts faster and lower your monthly payments, in addition to saving you money on interest in the long run.

Qualifying with a lender can be a challenge if your credit score needs some work, but there are debt consolidation loans for bad credit. Just pay close attention to factors that could affect your cost of borrowing, such as interest rate, fees and loan duration.

Best debt consolidation loans for bad credit

Avant: Best for fast funding

Minimum credit score: 600

APR: 9.95% – 35.99%

Loan length: 24 to 60 months

Loan amount: $2,000 to $35,000

Origination fee: Up to 4.75%

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 should you decide to apply for another personal loan down the road. Avant also funds your loan as quickly as the next business day so you won’t be waiting around very long.

What to like

  • Receive funds as soon as the next business day
  • Lower origination fee compared to other lenders
  • Reports to all three credit bureaus

What to keep in mind

  • Low maximum borrowing amount
  • Charges an origination fee
  • Charges late fee and dishonored payment fee

Happy Money: Best for consolidating credit card debt

Minimum credit score: 640

APR: 5.99% – 24.99%

Loan length: 24 and 60 months

Loan amount: $5,000 to $40,000

Origination fee: 0.00% – 5.00%

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

What to like

  • Transparent about loan requirements
  • No application or late payment fees
  • Consolidation loans specifically geared toward credit card debt

What to keep in mind

  • Funding time typically two to five business days
  • No joint applications
  • Loans not available in Massachusetts or Nevada

Peerform: Best for peer-to-peer lending

Minimum credit score: 600

APR: 5.99% – 29.99%

Loan length: 36 or 60 months

Loan amount: $4,000 to $25,000

Origination fee: 1.00% – 5.00%

Peerform is unique to this list as, instead of being a lender, it’s a peer-to-peer lending marketplace. Here’s how it works: After you apply, your creditworthiness is calculated by an algorithm that assigns you a grade, as well as an interest rate. If you’re approved for a loan, it will show up in the Peerform marketplace where investors will decide whether or not to fund your loan.

What to like

  • Low origination fee compared to other lenders
  • No prepayment penalties
  • Examines factors other than credit score for loan approval

What to keep in mind

  • Low borrowing amount
  • High minimum borrowing amount at $4,000
  • Less flexible repayment terms compared to other lenders

LendingClub: Best for low borrowing amounts

Minimum credit score: Not specified

APR: 7.04% – 35.89%

Loan length: 36 or 60 months

Loan amount: $1,000 to $40,000

Origination fee: 3.00% – 6.00%

Like many lenders on this list, LendingClub requires an individual to have a credit score of at least Not specified. However, if you’re applying for a joint personal loan, you’ll only need a minimum credit score of 540. Not only does LendingClub pay your creditors directly, but you may also receive your funds within 48 hours.

What to like

  • Option to change your due date one time
  • Receive funds within 48 hours
  • 15-day grace period for payments

What to keep in mind

  • Doesn’t offer loans in Iowa or Idaho
  • Limited borrower terms
  • Charges origination and late payment fees

LendingPoint: Best for low credit scores

Minimum credit score: 585

APR: 7.99% – 35.99%

Loan length: 24 to 72 months

Loan amount: $2,000 to $36,500

Origination fee: 0.00% – 7.00%

LendingPoint holds the lowest minimum credit score on this list, giving consumers with scores below the 585 mark an opportunity to qualify for a debt consolidation loan. However, keep in mind that if you have a poor credit score, you most likely won’t be eligible for LendingPoint’s lower APR rates.

What to like

  • Funds deposited as soon as next business day
  • Low minimum credit score
  • Annual income requirement of only $25,000

What to keep in mind

  • Loans not provided in Nevada or West Virginia
  • Doesn’t offer joint or cosigned loans
  • APR rates can get as high as 35.99%

OneMain Financial: Best for secured loans

Minimum credit score: Not specified

APR: 18.00% – 35.99%

Loan length: 24 to 60 months

Loan amount: $1,500 to $20,000

Origination fee: 1.00% – 10.00%

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; however, they may be significantly lower than rates offered by predatory lenders.

What to like

  • Offers both secured and unsecured loans
  • Flexible repayment terms of 24 to 60 months
  • Physical branches located throughout the country

What to keep in mind

  • Low maximum loan amount
  • High origination fees — 1.00% – 10.00%
  • High APR rates of 35.99%

Upgrade: Best for joint applications

Minimum credit score: 620

APR: 6.95% – 35.97%

Loan length: 36 or 60 months

Loan amount: $1,000 to $50,000

Origination fee: 1.85% – 8.00%

Upgrade has the highest minimum credit score requirement on this list. However, if your credit score isn’t quite up to par, this lender 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.

What to like

  • Receive funds within a day of approval
  • Among highest maximum loan amounts on list
  • Offers joint applications and secured loans

What to keep in mind

  • Can only choose from two loan terms
  • 620 minimum credit score
  • Loans not available in Washington D.C. or West Virginia

Upstart: Best for high borrowing amounts

Minimum credit score: 600

APR: 4.37% – 35.99%

Loan length: 36 or 60 months

Loan amount: $1,000 to $50,000

Origination fee: 0.00% – 8.00%

Consumers interested in Upstart can borrow up to $50,000 and receive funds 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.

What to like

  • 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

What to keep in mind

  • Restrictive loan terms of 36 or 60 months
  • Not available to Iowa or West Virginia residents
  • Doesn’t offer joint loans

What is a debt consolidation loan? The basics

One common way to consolidate debt is to take out a debt consolidation loan. This is a type of personal loan that’s used to roll multiple debts into a new one, ideally with a lower interest rate than what you’re currently paying. This would also reduce the number of debt payments you make each month, and could even shorten the amount of time you’re repaying debt.

Personal loans for debt consolidation are typically unsecured, which means they don’t require collateral. The lender will rely heavily on your credit score and debt-to-income (DTI) ratio to determine your eligibility and interest rates. But because of this, it can be difficult for people with bad credit to qualify, or to get a competitive APR.

However, there are lenders that work with bad-credit borrowers. Just be sure to check your estimated APR, which represents the total cost of borrowing. Your debt consolidation loan APR should be lower than what you’re paying on your current debts, like credit card debt.

Pros and cons of a debt consolidation loan

Debt consolidation loans aren’t right for everyone, so consider the benefits and drawbacks and ask yourself some questions about your debt payoff strategy.

 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 accounts with debt consolidation loans — you should also look out for prequalification, which 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 debt payoff plan, a debt 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. 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 for free without affecting your credit on the LendingTree app. You can also request a free copy of your credit report from all three credit bureaus at com.
  2. Research lenders in your credit band. If you have bad credit, the amount of lenders willing to extend you a loan will be limited —but hat doesn’t mean you’re out of options. Check minimum credit score requirements through potential lenders.
  3. Apply for prequalification. Prequalification involves a soft credit inquiry, so you can check your eligibility and 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.
  4. 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.
  5. Use the loan funds to pay off other debts. If approved, the lender will typically deposit the money into your banking trương mục within a few days. You can use this money to pay off all types of debts, like credit cards and payday loans.

exclamation iconexclamation icon Watch out for predatory lenders. Having bad credit can make you an easy target for

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.

What to do if you’re not approved

Not every borrower is a good candidate for a debt consolidation loan. In particular, it’s possible that consumers with very bad credit may not qualify for a loan at all. If you don’t have the income or credit score required for a debt consolidation loan, consider taking these steps before you formally apply.


  • Work on your credit score: 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. You can also check and monitor your credit score for free on the LendingTree app.


  • Find a cosigner: Bad credit borrowers may consider enlisting the help of a friend or family member who has good credit and would be willing to cosign on a debt consolidation 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 were unable to make payments. Depending on the lender, this could be your only chance of landing a loan. Make sure to research lenders that allow cosigners, as not all do.


  • Consider a secured personal loan: Debt consolidation loans are typically unsecured, but you may be able to find a secured personal loan that’s backed by collateral. Secured personal loans are more attainable for borrowers with bad credit, and it may be possible to get a lower APR on a loan that’s secured compared with an unsecured personal loan. However, you should exercise caution when taking out a secured loan: Some secured loans may use your auto title as collateral, which means that you could lose your car if you fail to repay the loan. A better option may be to find a personal loan that’s secured by your savings trương mục, so you don’t risk losing an owned asset, like your car.


  • Research credit unions: Credit unions are not-for-profit, member-owned financial institutions, and they may be more willing to work with members who have bad credit when it comes to debt consolidation. Credit unions have membership requirements that are typically based on where you live or work. If you’re not already a member of a credit union, research credit unions in your area that you can join. Some credit unions, like Alliant Credit Union and PenFed Credit Union, have more relaxed membership requirements, extending their membership to people regardless of where they live.

Alternatives to consolidating debt with bad credit

Although it’s hard to qualify for a personal loan with a subprime credit score, there are other debt consolidation strategies if you have bad credit.

calculatorcalculator Credit counseling/debt management plan

Nonprofit credit counseling agencies offer free and low-cost services to people who are struggling to keep up with debt. A certified credit counselor may be able to negotiate lower interest rates and fees with your creditors on your behalf. They can also set you up on a debt management plan, which consolidates your monthly payments into one single payment.

Credit counselors charge monthly fees if you enroll in a debt management plan, but these fees may be reduced or even waived if you meet certain income requirements. Make sure you do your research to find an accredited counseling agency and not a for-profit debt settlement company.

home with dollar Home equity loan

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. To calculate your home equity, simply subtract the amount you have left on your mortgage from the current value of your home.

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

nest eggnest egg 401(k) loan

A 401(k) loan lets you borrow from the money you have saved up in your retirement fund. Because you’re borrowing money from yourself, you may be able to take out this type of loan without a credit check, making it a good option for bad-credit borrowers. Interest rates are low, and the interest you do pay goes back into your retirement trương mục rather than to a bank.

However, keep in mind that any money you borrow now is taking from your retirement nest egg down the line. Plus, if you suddenly lose employment, you may be required to repay your loan in full within 90 days or risk paying taxes and penalties on the loan.

percentage with top icon Payday lenders

In almost all cases, borrowers should avoid taking out payday loans. A payday loan is a type of short-term loan that comes with immense fees and APR rates — sometimes as high as 391%. This can trap borrowers in a cycle of debt as people often have to take out more payday loans to pay for their original loan.

These types of lenders typically run between $50 and $1,000, though the amounts vary state to state, and borrowers won’t need to have a credit check in order to be approved. Payday loans are usually paid back in full via a lump sum rather than in installments.

handshaking icon Debt settlement

This alternative to debt consolidation is when a debt settlement company essentially negotiates new terms or settles your debts with lenders. Debt settlement allows you to reduce the amount of debt you have; however, there are some downsides to this. For one thing, you can be negatively impacted by debt settlement which can stay on your credit report for seven years. After debt settlement, you may also be responsible for paying taxes on the difference.

BalanceScale iconBalanceScale icon Bankruptcy

Bankruptcy is an option for borrowers who are unable to repay their debts. Typically, borrowers who take this course of action file for either Chapter 7 or Chapter 13 bankruptcy. Though there can be a lot of stigma around having to declare bankruptcy, it can alleviate a lot of financial stress for some people.

Before declaring bankruptcy, you are legally to first meet with a nonprofit credit counselor to go over your options and see if there are other options for you to avoid bankruptcy. However, before filing for bankruptcy, you’ll want to weigh the legal and financial repercussions first. Not only will you have to pay legal fees, but Chapter 13 bankruptcy can stay on your credit report for seven years and Chapter 7 bankruptcy for 10 years.

FAQ: Debt consolidation loans for bad credit

Are debt consolidation loans bad for your credit?

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 are able to make timely payments. Over time, this can boost your credit score.

What credit score is needed for a consolidation loan?

The credit score you need for a consolidation loan will vary from lender to lender. Some lenders, like Best Egg, will require that you have a higher credit score (640) while lenders like LendingPoint will accept scores as low as 585. Keep in mind that the lower your score, the higher your APR rates may be.

How can I get a loan with a lot of debt?

If you’re interested in getting a debt consolidation loan — but you have a lot of debt or your debt-to-income ratio is too high — getting approved for a loan may be difficult, but not impossible.

  • Check your credit score to see where you stand and what lenders you might qualify with.
  • Work on cutting down on your debt. You can do this by using methods like the debt snowball method or the debt avalanche method.
  • Don’t sign with the first lender to offer you a loan. Prequalify with various lenders so you can compare rates and terms before signing on the dotted line.


Why use LendingTree

By offering a detailed and objective trương mục of each lender’s rates and terms, LendingTree’s goal is provide you with all the information you need to make a financially sound decision specific to your situation. Our team of experts thoroughly vets and weighs each option — recommendations aren’t based on advertisers, but rather on an honest review of each lender’s offerings. By providing a full picture of what each lender has, we hope to leave you with peace of mind about your financial future.

Lenders were chosen based on factors such as minimum credit scores, APR rates, loan amounts, terms, fees and other credit requirements.