BEST OF

Best Debt Consolidation Loans of February 2023

Debt consolidation loans help borrowers combine multiple high-interest debts into a single payment. Compare our picks for the best loan options for all credit scores.

By Jackie Veling 

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If you’re like many Americans with high credit card balances, you may be looking for ways to get your debt under control. Debt consolidation loans are one option that can reduce your debt and help you pay it off sooner.

When comparing debt consolidation loans, look for low rates, flexible terms and consumer-friendly features such as direct payment to creditors. NerdWallet has reviewed more than 35 financial institutions to find the best personal loans for consolidating debt.

  • Upgrade: Best overall.

  • SoFi: Best for no fees.

  • Happy Money: Best for paying off credit card debt.

  • LightStream: Best for low rates.

  • Universal Credit: Best for bad credit.

  • Best Egg: Best for secured loan option.

  • Discover: Best for fast funding.

  • Achieve: Best for rate discounts.

  • LendingClub: Best for joint loans.

Best Debt Consolidation Loans From Our Partners

Sort

Our pick for

Best overall

Upgrade
Get rate

on Upgrade's website

Upgrade

5.0

NerdWallet rating 
Upgrade

Est. APR

8.49-35.97%

Loan amount

$1,000-$50,000

Min. credit score

560
Get rate

on Upgrade's website

Our pick for

No fees

SoFi
Get rate

on SoFi's website

SoFi

5.0

NerdWallet rating 
SoFi

Est. APR

7.99-23.43%

Loan amount

$5,000-$100,000

Min. credit score

None
Get rate

on SoFi's website

Our pick for

Low rates

Lightstream
Get rate

on LightStream's website

LightStream

5.0

NerdWallet rating 
Lightstream

Est. APR

6.99-23.99%

Loan amount

$5,000-$100,000

Min. credit score

660
Get rate

on LightStream's website

Our pick for

Rate discounts

Achieve
Get rate

on Achieve's website

Achieve Personal Loans

5.0

NerdWallet rating 
Achieve

Est. APR

7.99-29.99%

Loan amount

$5,000-$50,000

Min. credit score

620
Get rate

on Achieve's website

Our pick for

Paying off credit card debt

Happy Money
Get rate

on Happy Money's website

Happy Money

4.5

NerdWallet rating 
Happy Money

Est. APR

7.99-29.99%

Loan amount

$5,000-$40,000

Min. credit score

640
Get rate

on Happy Money's website

Our pick for

Secured loan option

BestEgg
Get rate

on Best Egg's website

Best Egg

4.5

NerdWallet rating 
BestEgg

Est. APR

8.99-35.99%

Loan amount

$2,000-$50,000

Min. credit score

600
Get rate

on Best Egg's website

Our pick for

Bad credit

Universal Credit
Get rate

on Universal Credit's website

Universal Credit

4.5

NerdWallet rating 
Universal Credit

Est. APR

11.69-35.93%

Loan amount

$1,000-$50,000

Min. credit score

560
Get rate

on Universal Credit's website

Our pick for

Joint loan option

Lending Club
Get rate

on LendingClub's website

LendingClub

5.0

NerdWallet rating 
Lending Club

Est. APR

8.30-36.00%

Loan amount

$1,000-$40,000

Min. credit score

600
Get rate

on LendingClub's website

Our pick for

Fast funding

Discover
Get rate

on Discover's website

Discover® Personal Loans

5.0

NerdWallet rating 
Discover

Est. APR

6.99-24.99%

Loan amount

$2,500-$35,000

Min. credit score

660
Get rate

on Discover's website

What is a debt consolidation loan?

A debt consolidation loan combines multiple unsecured debts — such as credit cards, medical bills and payday loans — into one fixed monthly payment.

A debt consolidation loan is usually a good idea if the interest rate on the loan is lower than the combined rates on your existing debts. With this lower rate, you’ll save money on interest and potentially pay off your debt faster.

You can use a debt consolidation calculator to estimate your interest savings and new monthly payment, and to compare various loan options.

How to choose the best debt consolidation loan

When deciding between debt consolidation loans, compare these factors.

Annual percentage rates: The loan's APR represents its true annual cost, as it includes all fees and interest charges. Rates vary based on your credit score, income and debt-to-income ratio. Use APRs to compare multiple loans. Choose a low rate with monthly payments that fit your budget.

Origination fees: Some lenders charge origination fees to cover the cost of processing your loan. This one-time fee typically ranges from 1% to 10% of the loan amount and is either deducted from your loan proceeds or added to the loan balance. If the fee is deducted from your loan proceeds, you’ll need to request more than the sum of your debts in order to cover the fee and still have enough to pay your creditors.

Avoid loans that include this fee to keep costs down, unless the APR is lower than loans with no origination fee.

Lender features: Some lenders offer consumer-friendly features like direct payment to creditors, which means the lender pays off your old debts once your loan closes, saving you that task.

Other features to shop for include free credit score monitoring and hardship programs that temporarily reduce or suspend monthly payments if you face a financial setback, such as a job loss.

How to qualify for a debt consolidation loan

Build your credit: Loan approval is based mainly on your credit score and ability to repay. It may be possible to get a debt consolidation loan with bad credit, but borrowers with good to excellent credit (690 credit score or higher) have more loan options and may qualify for lower rates. If you have fair or bad credit (690 credit score or lower), it can pay to build your credit before seeking a consolidation loan.

Apply for a joint or co-signed loan: Adding a co-borrower or co-signer to your application can help you qualify for a debt consolidation loan that you wouldn’t be able to on your own due to poor credit or low income. In a joint loan, both borrowers have equal access to the funds, unlike a co-signed loan, in which only the main applicant does. Co-borrowers and co-signers are on the hook for missed payments.

Shop around and pre-qualify: Compare offers from multiple lenders before applying for a debt consolidation loan. One of the easiest ways is by pre-qualifying, which lets you view potential loan terms, including the interest rate, with no hit to your credit score. Most online lenders offer pre-qualification, and you can pre-qualify for free on NerdWallet to compare offers and find the lowest rate.

Preparing for a debt consolidation loan

Plan ahead: Before your loan is funded, create a budget that allocates a percentage of your income toward debt repayment.

Curb spending: Avoid big expenditures on your credit cards as you pay off debt, but don’t close any of the cards. Canceling credit accounts can hurt your credit score.

Commit to the long-haul: Consolidating debt is a smart choice for many, but it’s important to remember the debt doesn’t disappear — it goes somewhere else. Most debt consolidation loans offer terms of two to seven years, so be prepared to stick to your monthly payments over that time period.

Will debt consolidation hurt my credit score?

Consolidating your debt with a personal loan can help — and hurt — your credit score. When you use the loan to pay off your credit cards, you lower your credit utilization, which measures how much of your credit limit is tied up. Lowering your credit utilization can help your credit.

On the other hand, applying for a loan requires a hard credit check, which can temporarily ding your credit score. And if you turn around and rack up new credit card debt, your credit score will suffer.

Making late payments on your new loan can also hurt your credit score, while on-time payments can help.

Other ways to tackle debt

A debt consolidation loan isn’t your only option for getting debt under control.

0% balance transfer credit card: For borrowers with good to excellent credit, transferring debts to a 0% balance transfer card may be a good option, as long as you can pay it off during the introductory period.

Credit counseling: Nonprofit organizations offer credit counseling, which includes helping you create a debt management plan. Similar to other consolidation products, these plans roll your debts into one manageable payment at a reduced interest rate.

Debt payoff strategies: If you’re not sure how to tackle debt, you may not need to consolidate. The debt snowball and debt avalanche methods are two common strategies for paying off debt. The snowball method focuses on paying off your smallest debt first, building momentum as you go. The avalanche focuses on paying off the debt with the highest interest rate first, then applying the savings elsewhere. Both can boost your payoff speed.

Last updated on February 1, 2023

Methodology

NerdWallet’s review process evaluates and rates personal loan products from more than 35 financial institutions. We collect over 45 data points from each lender, interview company representatives and compare the lender with others that seek the same customer or offer a similar personal loan product. 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. 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.

This methodology applies only to lenders that cap interest rates at 36%, the maximum rate most financial experts and consumer advocates agree is the acceptable limit for a loan to be affordable. NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodologies for personal loans and our editorial guidelines.

To recap our selections...

NerdWallet's Best Debt Consolidation Loans of February 2023

Frequently asked questions