Best Debt Consolidation Loans for Bad Credit
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A debt consolidation loan can help you pay off multiple debts faster by combining them into one monthly payment, ideally at a lower interest rate.
These online lenders offer debt consolidation loans to borrowers with bad credit. Compare offers from multiple lenders, including rates, terms and special features.
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- 35+ personal loans reviewed and rated by our team of experts.
- 20+ years of combined experience covering personal loans and financial topics.
- Objective, comprehensive star rating system assessing 20+ categories and 70+ data points.
- Governed by NerdWallet's strict guidelines for editorial integrity.
Best Debt Consolidation Loans for Bad Credit
7.80-35.99%
$1K-$50K
None
Upstart personal loans offer fast funding and may be an option for borrowers with low credit scores or thin credit histories. Upstart is a solid choice for financing large purchases.
- Must be a U.S. citizen or permanent resident living in the U.S.
- Must be at least 18 years old in most states.
- Must have a valid email address and Social Security number.
- Must have a full- or part-time job, a full-time job offer starting within six months or another source of regular income.
- Must have a personal bank account at a U.S. financial institution with a routing number.
- No bankruptcies in the last 12 months.
- No current delinquent accounts on your credit reports.
- Fewer than six hard inquiries on your credit report in the last six months, excluding student, auto and mortgage loans.
- Minimum credit score: None.
- Minimum annual income: $12,000.
- Origination: 0% to 12%.
- Late fee: 5% of the unpaid amount or $15, whichever is greater.
- Insufficient funds fee: $15.
9.99-35.99%
$1K-$50K
580
Upgrade personal loans come with multiple rate discounts and offer direct payment to creditors. This lender has a low minimum credit score requirement, making the perks stand out even more.
- Minimum credit score: 580.
- Minimum number of accounts on credit history: One account.
- Maximum debt-to-income ratio: 75%, including mortgage payments.
- Minimum length of credit history: Two years.
- Minimum income requirement: None. Lender accepts income from alimony, retirement, child support, Social Security, disability benefits and other sources.
- Origination fee: 1.85% to 9.99%.
- Late Fee: $10.
- Failed payment fee: $10.
11.69-35.99%
$1K-$50K
580
A Universal Credit loan is a sound option for bad-credit borrowers looking to build credit, but rates are high compared to similar lenders.
- Minimum credit score: 580.
- Minimum number of accounts on credit history: 1 account.
- Maximum debt-to-income ratio: 75%, including mortgage and the loan you’re applying for.
- Minimum length of credit history: 2 years.
- Minimum income requirement: None. Lender accepts income from alimony, retirement, child support, Social Security and other sources.
- Origination fee: 5.25% to 9.99%.
- Late fee: Up to $10.
- Non-sufficient funds fee: $10.
8.99-35.99%
$2K-$50K
560
Prosper accepts borrowers across the credit spectrum and offers competitive rates and fees, plus instant approval.
- Minimum credit score: 560; borrower average is 705.
- Minimum income: No minimum requirement; borrower average is $131,000.
- Maximum debt-to-income ratio: 50% (excluding mortgage); borrower average is 41.6% (including mortgage).
- Must be at least 18 years old.
- Must provide Social Security number and a U.S. bank account.
- Origination fee: 1% to 9.99%.
- Late fee: The greater of $15 or 5% of the unpaid amount.
- Insufficient funds fee: $15.
- Mailed-in payment fee: $5.
9.95-35.99%
$2K-$35K
550
Avant personal loans are a solid option for fair- and bad-credit borrowers who need fast funding, but their rates and origination fees can be high.
- Minimum credit score: 550. Avant uses FICO score version 8.0 and VantageScore version 3.0 from TransUnion.
- Minimum monthly net income: $1,200. This lender accepts income from employment alimony, retirement, child support, Social Security payments or disability benefits.
- Must be a resident of a state where Avant’s loans are available.
- Must provide a Social Security number.
- Must have a personal bank account in your name.
- No active bankruptcies.
- Origination fee: Up to 9.99%.
- Late fee: $25.
- Nonsufficient funds fee: $15.
7.99-35.99%
$2K-$50K
600
Best Egg is worth considering for borrowers looking for a secured loan or to consolidate debt, but the loans come with an origination fee.
- Minimum credit score: 600.
- Maximum debt-to-income ratio: 70% including a mortgage.
- Minimum credit history: 3 years and 1 account.
- Acceptable income sources: Employment, household income, alimony, retirement, child support, Social Security payments and disability benefits.
- Must be a U.S. citizen or permanent resident and at least 18 years of age.
- Origination fee: 0.99% - 9.99%.
Upstart personal loans offer fast funding and may be an option for borrowers with low credit scores or thin credit histories. Upstart is a solid choice for financing large purchases.
- Must be a U.S. citizen or permanent resident living in the U.S.
- Must be at least 18 years old in most states.
- Must have a valid email address and Social Security number.
- Must have a full- or part-time job, a full-time job offer starting within six months or another source of regular income.
- Must have a personal bank account at a U.S. financial institution with a routing number.
- No bankruptcies in the last 12 months.
- No current delinquent accounts on your credit reports.
- Fewer than six hard inquiries on your credit report in the last six months, excluding student, auto and mortgage loans.
- Minimum credit score: None.
- Minimum annual income: $12,000.
- Origination: 0% to 12%.
- Late fee: 5% of the unpaid amount or $15, whichever is greater.
- Insufficient funds fee: $15.
Upgrade personal loans come with multiple rate discounts and offer direct payment to creditors. This lender has a low minimum credit score requirement, making the perks stand out even more.
- Minimum credit score: 580.
- Minimum number of accounts on credit history: One account.
- Maximum debt-to-income ratio: 75%, including mortgage payments.
- Minimum length of credit history: Two years.
- Minimum income requirement: None. Lender accepts income from alimony, retirement, child support, Social Security, disability benefits and other sources.
- Origination fee: 1.85% to 9.99%.
- Late Fee: $10.
- Failed payment fee: $10.
A Universal Credit loan is a sound option for bad-credit borrowers looking to build credit, but rates are high compared to similar lenders.
- Minimum credit score: 580.
- Minimum number of accounts on credit history: 1 account.
- Maximum debt-to-income ratio: 75%, including mortgage and the loan you’re applying for.
- Minimum length of credit history: 2 years.
- Minimum income requirement: None. Lender accepts income from alimony, retirement, child support, Social Security and other sources.
- Origination fee: 5.25% to 9.99%.
- Late fee: Up to $10.
- Non-sufficient funds fee: $10.
Prosper accepts borrowers across the credit spectrum and offers competitive rates and fees, plus instant approval.
- Minimum credit score: 560; borrower average is 705.
- Minimum income: No minimum requirement; borrower average is $131,000.
- Maximum debt-to-income ratio: 50% (excluding mortgage); borrower average is 41.6% (including mortgage).
- Must be at least 18 years old.
- Must provide Social Security number and a U.S. bank account.
- Origination fee: 1% to 9.99%.
- Late fee: The greater of $15 or 5% of the unpaid amount.
- Insufficient funds fee: $15.
- Mailed-in payment fee: $5.
Avant personal loans are a solid option for fair- and bad-credit borrowers who need fast funding, but their rates and origination fees can be high.
- Minimum credit score: 550. Avant uses FICO score version 8.0 and VantageScore version 3.0 from TransUnion.
- Minimum monthly net income: $1,200. This lender accepts income from employment alimony, retirement, child support, Social Security payments or disability benefits.
- Must be a resident of a state where Avant’s loans are available.
- Must provide a Social Security number.
- Must have a personal bank account in your name.
- No active bankruptcies.
- Origination fee: Up to 9.99%.
- Late fee: $25.
- Nonsufficient funds fee: $15.
Best Egg is worth considering for borrowers looking for a secured loan or to consolidate debt, but the loans come with an origination fee.
- Minimum credit score: 600.
- Maximum debt-to-income ratio: 70% including a mortgage.
- Minimum credit history: 3 years and 1 account.
- Acceptable income sources: Employment, household income, alimony, retirement, child support, Social Security payments and disability benefits.
- Must be a U.S. citizen or permanent resident and at least 18 years of age.
- Origination fee: 0.99% - 9.99%.
Best debt consolidation lenders for bad credit
Upstart: Best for thin credit histories
Minimum credit score: None.
Loan amounts: $1,000 to $50,000.
Repayment terms: 3, 5 or 7 years.
Why we chose them: Upstart loans are available to borrowers who want to apply for a debt consolidation loan but don’t have enough credit history to generate a credit score.
» MORE: Read our Upstart review
Upgrade: Best for multiple rate discounts
Minimum credit score: 580.
Loan amounts: $1,000 to $50,000.
Repayment terms: 2 to 7 years.
Why we chose them: Qualifying for a low rate is important for debt consolidation, and Upgrade offers multiple ways to get a discount, like by setting up automatic payments.
» MORE: Read our Upgrade review
Universal Credit: Best for fast funding
Minimum credit score: 580.
Loan amounts: $1,000 to $50,000.
Repayment terms: 3 or 5 years.
Why we chose them: Universal Credit can fund most debt consolidation loans the day after you’re approved, getting you quickly on the path to paying off your debts.
» MORE: Read our Universal Credit review
Prosper: Best for hardship support
Minimum credit score: 560.
Loan amounts: $2,000 to $50,000.
Repayment terms: 2 to 5 years.
Why we chose them: If you fall on tough times, Prosper offers hardship support, which may include reduced monthly payments or an extended term on debt consolidation loans.
» MORE: Read our Prosper review
Avant: Best for low income requirement
Minimum credit score: 550.
Loan amounts: $2,000 to $35,000.
Repayment terms: 2 to 5 years.
Why we chose them: If you’re worried about applying for a debt consolidation loan with bad credit, Avant has a low income requirement – $1,200 net monthly – which can help you qualify.
» MORE: Read our Avant review
Best Egg: Best for secured loan option
Minimum credit score: 600.
Loan amounts: $2,000 to $50,000.
Repayment terms: 3 to 5 years.
Why we chose them: Best Egg lets borrowers use home fixtures or their vehicle as collateral for a debt consolidation loan, which can help you qualify for a lower rate or a larger loan.
» MORE: Read our Best Egg review
What is a debt consolidation loan for bad credit?
A debt consolidation loan is a personal loan you use to pay off multiple forms of debt, such as credit cards, medical bills and unsecured loans. You’re then left with one monthly payment — your new consolidation loan — which can help simplify and speed up getting out of debt.
Debt consolidation loans are available to borrowers across the credit spectrum. Though borrowers with good and excellent credit (690 credit score or higher) will likely qualify for lower interest rates, there are still options for borrowers with bad credit (629 credit score or lower).
Pros and cons of debt consolidation loans for bad credit
Like with any financial decision, it’s important to carefully weigh the pros and cons of debt consolidation before applying for a loan.
Pros
- Save interest and time.
- Fixed, predictable payments.
- Ability to build credit.
- Clear finish line to being debt-free.
Cons
- May not qualify for a low rate.
- Temporary hit to your credit.
- Doesn’t address the root causes of debt.
Pros of debt consolidation loans for bad credit
You’ll save money on interest: By consolidating your debts under a loan with a lower interest rate, you’ll save money on interest. You can even apply that savings back to your debt to speed up your payoff time and get out of debt faster.
You’ll have fixed monthly payments: Debt consolidation loan payments are fixed, meaning you’ll owe the same amount each month, which makes it easier to budget for.
You can build credit: Reputable lenders will report your payment history to the credit bureaus, so paying off your consolidation loan on time can help build your credit score.
You’ll have a clear finish line: By taking out a loan with a set repayment term, you’ll know exactly what day you’ll be debt-free, which can be especially motivating.
Cons of debt consolidation loans for bad credit
It may be hard to get a low enough rate: Borrowers with bad credit may have a hard time qualifying for a lower rate than their current debts. (See ways to improve your chances of approval below.)
Your credit will take a small hit: Applying for a debt consolidation loan will require a hard credit inquiry, which temporarily knocks a few points off your credit score.
Consolidation doesn’t address the root causes of debt: Consolidating your debts won’t fix issues like overspending or not making enough income to cover expenses.
Where to get a debt consolidation loan with bad credit
You can get a debt consolidation loan for bad credit from a credit union or online lender.
Credit unions
Credit unions are one of the best places to look for a debt consolidation loan if you have bad credit. That’s because credit unions are willing to lend to borrowers with lower credit scores while still offering affordable rates. You will need to become a member of the credit union before applying, but this process is usually quick and affordable.
Online lenders
Online lenders also lend to borrowers with bad credit. Though their rates could be higher than some credit unions, they offer convenient perks. For example, online lenders will typically fund a loan quickly — sometimes the same day you’re approved — and many send the funds directly to your creditors, saving you the step of paying off the debts yourself.
» COMPARE: The best debt consolidation loans
How to get a debt consolidation loan with bad credit
1. Know how much debt you have and what rate you need to qualify for
Knowing how much debt you’re carrying tells you the loan amount you need to apply for. You can use NerdWallet’s debt consolidation calculator to plug all your existing debts into one place and get the total amount.
You can also use the calculator to see the combined interest rate. Look for a debt consolidation loan with a lower annual percentage rate, or APR, than your existing debts. This saves you money on interest. Though rates on debt consolidation loans vary, borrowers with a credit score of 629 or lower may qualify for an estimated average APR around 20.82%, according to anonymized data from users who pre-qualified with NerdWallet.
2. Pre-qualify with lenders to compare loan offers
Before formally applying for a debt consolidation loan, you’ll first want to pre-qualify, which you can do with most online lenders.
Even if you ultimately go with a credit union, it’s still smart to see your options. Since pre-qualifying does not include a hard credit check, you can check potential rates, loan amounts and terms with no risk to your credit score.
3. Fill out the loan application
Once you’ve decided on a lender, you’ll need to fill out an application. Most applications are online and require personal information like name, address and Social Security number; contact information; income and debts; and desired loan amount, loan purpose and repayment term.
After you submit the application, you’ll wait to hear from the lender whether you’re approved or denied. Some decisions are instantaneous, while some take longer, especially if more documentation, like proof of employment, is required.
4. Receive funding and pay off your creditors
If you’re approved, look carefully over your loan agreement before signing. Once you sign the agreement and receive the funds in your account, send the money to your creditors. This is the most important step. If you fail to pay off your creditors, you could end up even more in debt than before.
If the lender offers to send the funds themselves, ask for a confirmation or check with your creditors to make sure all your debts have been paid.
5. Make payments on your new loan
It’s important to make a plan for tackling your new consolidation loan. Create a budget that takes this monthly payment into account and stick to it until the loan is paid off.
Try to keep your credit card balance at or near zero while you pay off your consolidation loan. Avoid closing the accounts, which can lower your credit score.
Tips for getting approved for a debt consolidation loan
1. Focus on quick wins for your credit.
Start by paying down any small debts if you can. This lowers your debt-to-income ratio, which could help quickly build your score. You can also check your credit report for errors and file a dispute.
2. Consider a co-signed or joint loan.
Applying for a co-signed or joint loan, especially if the co-borrower has a better credit score or higher income than you, could improve your chances of getting approved. Co-borrowers are on the hook for repayment.
3. Tie collateral to the loan application.
Applying for a secured loan, in which you pledge collateral like your car or savings account to help guarantee the loan, is another way to boost your application. But if you fail to repay the loan, the lender can seize the collateral.
Other ways to tackle debt if you have bad credit
A debt consolidation loan isn’t your only option for getting out of debt if you have bad credit.
DIY debt payoff strategies
You can take a do-it-yourself approach to paying off debt with two time-tested strategies: the debt snowball or the debt avalanche method.
With the debt snowball method, you tackle your smallest debt first and then work your way up, building momentum as you go. With the debt avalanche, you tackle your most expensive debt first, meaning the one with the highest interest rate, and apply your savings to the next highest and so on.
Credit counseling
If you’d like help with tackling your debt instead, credit counseling can be a great resource. Credit counselors at a reputable non-profit can help negotiate your interest rates down and put you on a debt management plan. These plans can help you get out of credit card debt in three to five years and come with small monthly fees.
Debt settlement
Debt settlement is the process of settling your debts for less than you owe, usually with the help of a debt settlement company. A debt settlement company will ask you to stop making payments on your debts and instead funnel that money into a holding account. Once a debt is significantly overdue, the settlement company will approach your creditor with a settlement offer, using the money in the holding account. Debt settlement is risky, though, so explore alternatives first.
Bankruptcy
If you have significant debt (more than 40% of your income) and you don’t think you can pay it off within five years, bankruptcy is another option. This wipes out most unsecured debts, but it’s hard on your credit score. You’ll want to consider other alternatives first.
» COMPARE: More options for debt relief
Last updated on November 7, 2024
Methodology
NerdWallet’s review process evaluates and rates personal loan products from more than 35 financial technology companies and financial institutions. We collect over 50 data points and cross-check company websites, earnings reports and other public documents to confirm product details. We may also go through a lender’s pre-qualification flow and follow up with company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.
Our star ratings award points to lenders that offer consumer-friendly features, including: soft credit checks to pre-qualify, competitive interest rates and no fees, transparency of rates and terms, flexible payment options, fast funding times, accessible customer service, reporting of payments to credit bureaus and financial education. Our ratings award fewer points to lenders with practices that may make a loan difficult to repay on time, such as charging high annual percentage rates (above 36%), underwriting that does not adequately assess consumers’ ability to repay and lack of credit-building help. We also consider regulatory actions filed by agencies like the Consumer Financial Protection Bureau. We weigh these factors based on our assessment of which are the most important to consumers and how meaningfully they impact consumers’ experiences.
NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodologies for personal loans and our editorial guidelines.
NerdWallet's Best Debt Consolidation Loans for Bad Credit
- Upstart: Best for Debt consolidation loans for bad credit
- Upgrade: Best for Debt consolidation loans for bad credit
- Universal Credit: Best for Debt consolidation loans for bad credit
- Prosper: Best for Debt consolidation loans for bad credit
- Avant: Best for Debt consolidation loans for bad credit
- Best Egg: Best for Debt consolidation loans for bad credit
