Best Debt Consolidation Loans for Bad Credit
A debt consolidation loan may be a good option for borrowers with bad credit. Pre-qualify with multiple lenders and choose a loan with a lower interest rate than your existing debts.
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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.
Borrowers with bad credit can qualify for a debt consolidation loan. Consider these loan options when deciding if a debt consolidation loan is the right choice for you.
Best Debt Consolidation Loans for Bad Credit From Our Partners
Lender ▾ ▾ | NerdWallet Rating ▾ ▾ | Est. APR ▾ ▾ | Loan amount ▾ ▾ | Min. credit score ▾ ▾ | Learn more |
|---|---|---|---|---|---|
5.0 /5 | 8.49-35.99% | $1,000-$50,000 | 560 | Top 3 most visited 🏆 Get rateon Upgrade's websiteon Upgrade's website | |
4.5 /5 | 4.60-35.99% | $1,000-$50,000 | None | Top 3 most visited 🏆 Get rateon Upstart's websiteon Upstart's website | |
4.5 /5 | 7.99-35.99% | $2,000-$36,500 | 660 | Get rateon LendingPoint's website on LendingPoint's website | |
4.0 /5 | 11.69-35.99% | $1,000-$50,000 | 560 | Get rateon Universal Credit's website on Universal Credit's website | |
OneMain Financial Top 3 most visited 🏆 Get rateon OneMain Financial's websiteon OneMain Financial's website | 3.5 /5 | 18.00-35.99% | $1,500-$20,000 | None | Top 3 most visited 🏆 Get rateon OneMain Financial's websiteon OneMain Financial's website |
Our pick for
Debt consolidation loan for bad credit
Universal Credit
11.69-35.99%
$1,000-$50,000
560
OneMain Financial
18.00-35.99%
$1,500-$20,000
None
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).
When is a debt consolidation loan a good idea?
When considering whether to take out a debt consolidation loan if you have bad credit, you’ll want to make sure the annual percentage rate, or APR, is lower on the consolidation loan than the combined interest rate of your existing debts. By choosing a loan with a lower APR, you’ll save money on interest and potentially lower your monthly debt payment.
Rates on debt consolidation loans vary, but borrowers with a credit score of 629 or lower may qualify for an estimated average APR around 25%, according to anonymized data from users who pre-qualified with NerdWallet.
Use our debt consolidation calculator to plug in existing debts and see your combined interest rate.
Where to get a debt consolidation with bad credit
You can get a debt consolidation loan from three types of lenders: credit unions, online lenders and banks.
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.
» MORE: How a credit union loan works
Online lenders also lend to borrowers with bad credit. Though their rates could be higher than some credit unions, they offer other 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.
Banks typically offer consolidation loans with low interest rates, but they’re harder to qualify for and often require borrowers to have good or excellent credit. Plus, some don’t offer the option to pre-qualify, meaning you can’t check your rates without a hit to your credit score. If you have bad credit, it may be best to look elsewhere.
Apply for a debt consolidation loan with bad credit
To apply for a debt consolidation loan with bad credit, 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.
Once you’ve decided on a lender, you’ll need to fill out an application. Most applications are online and require you to list personal details 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 may take longer, especially if more documentation, like proof of employment, is required.
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 them to your creditors. If the lender offers to send the funds themselves, ask for a confirmation or check with your creditors to make sure all debts have been paid.
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.
Last updated on November 29, 2022
Methodology
NerdWallet’s review process evaluates and rates personal loan products from more than 35 technology companies and financial institutions. We collect over 50 data points from each lender 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 loan for bad credit
- Upgrade: Best for Debt consolidation loan for bad credit
- Universal Credit: Best for Debt consolidation loan for bad credit
- OneMain Financial : Best for Debt consolidation loan for bad credit
- LendingPoint: Best for Debt consolidation loan for bad credit
