Debt Consolidation Loans for Bad Credit in September 2024

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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 Carol Pope | Edited by Jessica Sain-Baird | Reviewed September 3, 2024

300

7.80% - 35.99%

36 or 60 months

$1,000 to $50,000

0.00% - 12.00%

Pros
  • One of the lowest credit score requirements on the market
  • Can get your money one day after you're approved
  • Borrowers can take out up to $50,000
Cons
  • Only two repayment terms to choose from (36 or 60 months)
  • Although you may be approved with bad credit, your rate will probably be high
  • Can't take out a loan with a second person

What to know

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If you have bad (or no) credit, lending platform Upstart may be worth exploring. It requires a minimum of 300, one of the lowest credit floors around. Also, unlike other traditional lenders, you could still qualify if you lack credit history.

However, if you have bad credit, you could be on the hook for a hefty origination fee between 0.00% - 12.00%.

Read our full Upstart personal loan review.

How to qualify

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It may be easier to qualify for an Upstart loan, but the company doesn’t approve everyone. Aside from a credit score of at least 300, you must have:

  • A degree or be enrolled in a degree program if you don’t have credit
  • A 50% debt-to-income ratio of (45% in Connecticut, Maryland, New York and Vermont)
  • Fewer than six inquiries on your credit report in the last six months
  • No current delinquencies
  • No bankruptcies in the last year

Additionally, Upstart may cancel your loan if your credit score drops in between approval and when they send you your money.

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560

8.99% - 35.99%

24 to 60 months

$2,000 to $50,000

1.00% - 9.99%

Pros
  • Can add a second person to your loan
  • Peer-to-peer loans can be easier to qualify for
  • As long as you're caught up, you may be able to change your due date once a year
Cons
  • Will keep 1.00% - 9.99% of your loan funds as an origination fee
  • Loan request will be canceled if investors don't fund at least 70% of your loan within 14 days
  • $15 late fee (or 5% of the unpaid balance, whichever is greater)

What to know

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Prosper is a peer-to-peer loan marketplace that links investors with potential borrowers. It offers a wide range of APRs, as well as flexible loan amounts.

Although you could get your loan as soon as the next business day after Prosper approves you, getting to that stage can be lengthy (five business days in some cases). And since it’s peer-to-peer, you’ll need to wait for an individual investor to pick up your loan request.

Read our full Prosper personal loan review.

How to qualify

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To get a Prosper loan, your credit score must be at least 560. You also need to have a personal bank account and Social Security number. Prosper is available in every state except for Iowa and West Virginia.

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580

9.99% - 35.99% (with autopay)

24 to 84 months

$1,000 to $50,000

1.85% - 9.99%

Pros
  • Offers next-day loans
  • Can offer your car as collateral to help your approval chances
  • Can add a second person to your application
Cons
  • Keeps between 1.85% - 9.99% out of every loan as an origination fee
  • No live chat for application questions
  • $10 late payment fee

What to know

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Upgrade offers joint loans. If you’re looking to consolidate debt that you and someone else have accrued together, this lending platform might fit the bill. You could also take out a secured loan to access lower rates.

If your score is low, you may have to pay a steep origination fee. Further, you must set up autopay and allow Upgrade to pay your creditors to get its lowest rates.

Read our full Upgrade personal loan review.

How to qualify

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If you have truly bad credit, you might not qualify for Upgrade by yourself. It requires a score of at least 580. It will also review your credit usage and history. You also have to:

  • Be a U.S. citizen, permanent resident, or live in the U.S. with a valid visa
  • Be the age of majority in your state
  • Provide a verifiable bank account and email address
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580

9.95% - 35.99%

24 to 60 months

$2,000 to $35,000

Up to 9.99%

Pros
  • Fast funding timeline (as soon as the day after you're approved)
  • Lower origination fee compared to other lenders
  • Reports to all three credit bureaus
Cons
  • Might not offer enough money if you have a big amount of debt to consolidate
  • Potential for high origination fee
  • $25 late payment fee

What to know

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Since Avant reports to all three credit bureaus — Equifax, Experian and TransUnion — consolidating through this lender could increase your creditworthiness. Avant also funds your loan as quickly as the next business day.

Avant’s maximum loan amount is a little low. On the plus side, it has a short minimum loan term. This could make Avant debt consolidation a contender if you have a moderate amount of debt to consolidate.

Read our full Avant personal loan review.

How to qualify

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Other than a minimum credit score of 580, Avant doesn’t provide much insight into its eligibility requirements. It does advise that it may call your employer as part of its verification process.

It also requires you to have a personal checking or savings account on file. You may need to verify your identity (which you can do electronically).

Avant loans are not available in Hawaii, Iowa, Maine, Massachusetts, New York, Vermont and West Virginia.

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600

8.98% - 35.99%

24 to 60 months

$1,000 to $40,000

3.00% - 8.00%

Pros
  • Can change your due date one time
  • Able to add another person to your loan
  • 15-day grace period for payments
Cons
  • Loan amounts only up to $40,000
  • Low mobile app rating from Android users
  • All loans get an origination fee of 3.00% - 8.00%

What to know

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LendingClub can pay your creditors directly, which might take some stress out of consolidating debt. But if you choose to handle this yourself, LendingClub’s payment grace period could provide peace of mind.

However, this online lender charges an origination fee on every loan. LendingClub can pay up to 12 creditors on your behalf, and you can only borrow up to $40,000.

Read our full LendingClub personal loan review.

How to qualify

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Since it requires a credit score of 600 or higher, not everyone will qualify. Adding a co-borrower could help. LendingClub also requires that you:

  • Be at least 18
  • Have a verifiable bank account
  • Not live in a U.S. territory

Like most other lenders, LendingClub will also determine your eligibility through your credit history, debt-to-income ratio and other information provided by the credit bureaus.

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640

11.72% - 17.99%

24 to 60 months

$5,000 to $40,000

1.50% - 5.50%

Pros
  • Can opt to pay creditors directly
  • No application or late payment fees
  • Consolidation loans specifically geared toward credit card debt
Cons
  • May need to wait three to six business days for your funds
  • Can't add a second person to your loan
  • Loans not available in Massachusetts or Nevada

What to know

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Happy Money loans are specifically for those wanting to refinance credit card debt. Even if you barely qualify for a loan, your maximum APR will only be 17.99%. This is much lower than many other lenders that offer debt consolidation loans for bad credit.

However, you can’t get a small loan from Happy Money. You will also have to pay an origination fee (albeit one that’s lower than some competitors).

Read our full Happy Money personal loan review.

How to qualify

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For a Happy Money loan approval, you need:

  • A credit score of at least 640
  • No current delinquencies
  • An acceptable debt-to-income ratio and credit history
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660

7.99% - 35.99%

24 to 72 months

$1,000 to $36,500

Up to 10%

Pros
  • Funds deposited as soon as next business day
  • Long loan repayment terms
  • Annual income requirement of only $35,000
Cons
  • Loans not available in Nevada or West Virginia
  • Doesn’t offer joint or cosigned loans
  • APR rates can get as high as 35.99%

What to know

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LendingPoint only offers loans to those with fair credit, but it has a low annual income requirement. While you might not qualify for a LendingPoint right now, you might after you improve your credit score a little.

LendingPoint may not make sense if you have a lot of debt to consolidate — its maximum loan amount is just $36,500. Also, if you don’t have the credit to qualify, you can’t add a co-borrower to boost your approval odds.

Read our full LendingPoint personal loan review.

How to qualify

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LendingPoint has transparent eligibility requirements. To get a debt consolidation loan, you must have a 660+ credit score. You must also:

  • Be at least 18 years old
  • Provide a government-issued photo ID
  • Provide a Social Security number
  • Bring in at least $35,000 annually
  • Have a verifiable personal bank account in your name
  • Live in a state that LendingPoint does business
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Not specified

18.00% - 35.99%

24 to 60 months

$1,500 to $20,000

1.00% - 10.00%

Pros
  • Can offer collateral to get a lower rate
  • Can get your loan via prepaid debit card
  • Physical branches located throughout the country
Cons
  • Won't work if you have more than $20,000 worth of debt to consolidate
  • High origination fees
  • High interest rates

What to know

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Some borrowers prefer an in-person loan experience. With over 1,400 physical branches located in 44 states, OneMain can help with that. You can also apply online. This lender offers secured loans, which could help you qualify when you’d otherwise be denied.

OneMain Financial may only work if you need a small loan — its maximum loan amount is $20,000. Although OneMain Financial’s minimum APR is high, its maximum APR is fairly standard if you have bad credit.

Read our full OneMain Financial personal loan review.

How to qualify

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OneMain Financial’s eligibility requirements are vague, but it’s known to work with bad-credit borrowers. Generally, OneMain Financial will review the following factors when you apply:

  • Financial and credit history
  • Debt-to-income ratio
  • Bankruptcies
  • Loan purpose
  • Your state of residence
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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.

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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. Review our list of the best personal loans with a cosigner. Be aware that not all lenders allow cosigners.
  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. Debt management plans can 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). The interest you pay goes back into your 401(k), 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.