Best Debt Consolidation Loans for Bad Credit of May 2025

Top debt consolidation companies for bad credit

Upstart: Best for thin credit histories

What credit score do I need? Upstart has no minimum credit score requirement.

Why we like Upstart: 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, which is a unique feature among lenders.

» MORE: Read our Upstart review

Upgrade: Best for multiple rate discounts

What credit score do I need? You need a minimum 580 credit score to apply with Upgrade.

Why we like Upgrade: 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 — which also helps you avoid late fees.

» MORE: Read our Upgrade review

Universal Credit: Best for fast funding

What credit score do I need? You need a minimum 580 credit score to apply with Universal Credit.

Why we like Universal Credit: 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

Avant: Best for low income requirement

What credit score do I need? You need a minimum 550 credit score to apply with Avant.

Why we like Avant: Avant’s low income requirement — $1,200 net monthly — could help you qualify if you’re worried your credit score isn't high enough. Income is another factor lenders consider when deciding whether to approve you for a loan.

» MORE: Read our Avant review

Best Egg: Best for secured loan option

What credit score do I need? You need a minimum 600 credit score to apply with Best Egg.

Why we like Best Egg: 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

How does debt consolidation with bad credit work?

Many people who struggle with debt have bad credit (any score from 300 to the high 500s), but the good news is you can still qualify for a debt consolidation loan to help pay off your debts.

Online lenders and credit unions offer debt consolidation loans for borrowers with low credit scores, and these loans can not only ease your debt burden, but also help you save money in the long run.

Here’s how it works: You apply for a debt consolidation loan (amounts range from $1,000 to $50,000), and if approved, you use that money to pay off all your debts in one go. Now you’re left with only one debt — your new loan — which simplifies the payoff process, since you’re no longer juggling multiple payments and due dates. Most debt consolidation loans come with repayment terms of one to seven years.

How to boost debt consolidation loan approval

Many lenders offer debt consolidation loans for borrowers with bad credit, and you may not need to do anything other than apply. But if you want to boost your approval chances even higher, these three tips can help.

Rack up a couple quick wins for your credit score

Before you apply for a debt consolidation loan, start by paying down any small debts, if possible. This lowers your debt-to-income ratio, which can help quickly build your score. You can also check your credit report for errors (more common than you think) and file a dispute.

Add someone with better credit to your loan application

Applying for a co-signed or joint loan, especially if the co-borrower has a better credit score or higher income than you, can majorly improve your chances of getting approved. You’ll want to make sure this is a person you can trust, since they may have access to the loan funds, and they’ll be equally on the hook for repayment.

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. This makes the loan less risky for the lender, so they’re more likely to approve or give you a lower rate. But keep in mind that if you fail to repay the loan, the lender can seize the collateral.

The pros and cons of debt consolidation loans for bad credit

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.

» 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.

2. Pre-qualify with multiple lenders

If you have bad credit, it’s particularly important to compare interest rates and terms from multiple lenders in order to get the best deal on your debt consolidation loan. The easiest way to do that is by a process called pre-qualifying.

Pre-qualifying just means filling out a short application on the lender’s website and submitting to a soft credit check, which won’t hurt your credit score. You can then view your estimated annual percentage rate with that lender. You’ll want a rate that’s lower than your existing debts, which allows you to save money and get out of debt faster.

Almost all online lenders offer pre-qualification, as well as some credit unions.

» MORE: Pre-qualify with multiple lenders for free on NerdWallet

3. Submit your application

Once you’ve pre-qualified and chosen a lender, it’s time to officially apply for the loan. This process is usually online, and you’ll be asked to provide personal information, including your Social Security number, and any required documentation that verifies your identity, income and employment.

Many lenders can make an immediate approval decision, though some may take a few business days to get back to you.

» MORE: How to get a personal loan

4. Get funded

Once you’re approved, you’ll receive the loan documents, which you can usually sign electronically. Make sure to read the documents carefully before signing.

Lenders can deposit the funds directly into your bank account, though some may offer direct payment to creditors, which means the lender pays off your creditors for you, simplifying the process — and eliminating any temptation to use the cash for something else.

Though funding time varies, many online lenders offer same- and next-day funding.

5. Pay down debt and keep up with loan payments

Once you receive the funds in your account, use them to pay off your debts. If the funds are being sent to your creditors for you, confirm with each creditor that your debt was successfully paid off.

Next, make a plan to manage your loan, which may include building a budget that prioritizes your new monthly payment and keeping an eye on any refinancing opportunities.

Most lenders charge a late fee for missed payments — and report them to the credit bureaus, which can hurt your score — so consider setting up automatic payments to avoid falling behind.

FAQs about debt consolidation loans for bad credit

What credit score do I need for a debt consolidation loan?

Many online lenders have no minimum credit score requirement, and some will use alternative data, like your college education or work experience, to help qualify you for a debt consolidation loan. Upstart is a good example.

Can I get a guaranteed debt consolidation loan with bad credit?

No lender should guarantee approval for a debt consolidation loan. If you stumble on a lender that implies you’ll be approved no matter what, steer clear. This is likely a predatory lender that may charge triple-digit interest rates. Reputable lenders conduct a hard credit check before deciding whether to approve you and charge a maximum APR of 36%.

What is a credit card consolidation loan for bad credit?

A credit card consolidation loan is just another name for a debt consolidation loan. Many people use debt consolidation loans to pay off multiple credit card balances at once, which is why it’s sometimes called a credit card consolidation loan. Online lenders and credit unions offer these loans to borrowers even if they have bad credit, but you may need to shop around to make sure you’re getting the best rate.

Other ways to tackle your 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.