Best Debt Consolidation Loans for Bad Credit of November 2026

Our picks for the best debt consolidation loans for bad credit

It’s normal to have less than stellar credit when you’re struggling with debt. The lenders below cater specifically to borrowers with lower credit scores, and their loans can help you pay off unsecured debts like credit cards, medical bills and payday loans, so you can get out of debt faster.

Upgrade: Best for multiple rate discounts

One of the biggest challenges if you have bad credit is finding a debt consolidation loan with a lower rate than your current debts. Upgrade makes it easier by offering two potential rate discounts: one for setting up autopay and one for sending the loan proceeds directly to your creditors.

Not all lenders offer rate discounts, and together Upgrade’s discounts could mean at least a 1 percentage point reduction in your rate (likely higher), saving you hundreds of dollars in interest. That’s why Upgrade earns a perfect 5.0 rating in our rate discounts subcategory.

Read our full review of Upgrade

Upstart: Best for borrowers with thin credit or no credit history

Upstart doesn’t rely as much on your creditworthiness to qualify you compared to other lenders. Instead Upstart looks at alternative data, like college education and work experience, and it even accepts borrowers that don’t have enough credit history to generate a credit score.

If you do have a credit score, its minimum requirement is 300, which is far below any lender on this list. Upstart says this approach helps it approve more borrowers at lower rates.

Read our full review of Upstart

Best Egg: Best for secured debt consolidation loans

Another way to improve your chances of getting a debt consolidation loan with bad credit is to secure the loan with collateral. Best Egg lets homeowners secure their personal loan with a permanent home fixture, like built-in cabinets or bathroom vanities.

This helps “guarantee” the loan, so it makes it easier to get approved and receive a lower rate. That’s why we award a higher rating in our “Loan flexibility” category to lenders who offer this feature (Best Egg scores a 4.5 out of 5.0 here).

Read our full review of Best Egg

Universal Credit: Best for fast funding

When you’re ready to start the journey to becoming debt-free, you don’t want to lose momentum waiting a week or longer to get your debt consolidation loan. Universal Credit offers instant loan approvals and can send funds the next day.

That means you’ll go from application to funding in as little as 24 hours, which is lightning-fast even for an online lender.

Read our full review of Universal Credit

Avant: Best for low income requirement

A minimum income requirement can be just as hard to meet as a credit score requirement. Avant stands out for its leniency — it only requires $14,400 net annual income to qualify for its personal loan, while its average borrower has an annual gross income of $50,000 to $99,999.

Compare that with other lenders on this list, like Upgrade, who says its average borrower makes a minimum of $100,000 per year.

Paired with its particularly low minimum credit score requirement (550), Avant is a strong option if you’re worried about meeting the qualification criteria.

Read our full review of Avant

How do I pay off my debt with a debt consolidation loan?

Debt consolidation loans come in loan amounts ranging from $1,000 to $50,000.

You can apply for a loan online, and once you’re approved and receive the funds, you use that money to pay off all your existing debts in one go.

Now you’re left with a single monthly payment on your new loan. This simplifies the debt payoff process, since you’re no longer juggling multiple payments and due dates. Debt consolidation loans have fixed interest rates, too, so you’ll make the same payment each month.

Repayment periods on debt consolidation loans range from two to seven years. There’s typically no prepayment penalty for paying off your loan early.

Does it make sense to consolidate debt when I have bad credit?

As long as you qualify for a lower annual percentage rate, or APR, than the average rate you’re currently paying across your debts, it makes sense to consolidate.

A debt consolidation calculator is the best way to figure this out. Plug in your total debt, average interest rate and total monthly payment. Then, choose your credit bracket to see how much you could save with a debt consolidation loan. 

Pros and cons of debt consolidation loans

Compare the pros and cons below to get a fuller picture of debt consolidation loans.

Pros of debt consolidation loans for bad credit

Cons of debt consolidation loans for bad credit

» COMPARE: The best debt consolidation loans for any credit score

What the nerds think

How can you tell if a debt consolidation loan will actually help you or just dig you deeper into debt?

“It’s important to consider why you first got into debt. Did you have a period of unemployment or get hit with a major unexpected expense? These are one-off setbacks, and a debt consolidation loan can help you put that debt behind you for good. But if you’re in debt because you chronically overspend, or you simply don’t make enough money to cover your monthly obligations, I’d avoid taking out a loan. Instead, consider other ways to get out of debt, like a debt management plan. These are explored lower down.”

Jackie VelingLead Writer

What rate can I expect on a debt consolidation loan?

Though the rate you get depends on the lender and the details of your loan application, borrowers with bad credit can expect an average debt consolidation loan rate of 45.02%, according to NerdWallet rate data.

Source: Average rates are based on aggregate, anonymized offer data from users who pre-qualified for debt consolidation loans through NerdWallet in the last 30 days. Rates are estimates only and not specific to any lender.

How do I boost my approval odds on a debt consolidation loan?

Many lenders offer debt consolidation loans even if you have bad credit, and you don’t need to do anything other than apply. But if you want to boost your approval chances even higher — and get the lowest rate possible — 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. This needs to be a person you 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.

5 steps to get a debt consolidation loan with bad credit

1. Know how much debt you have and what rate you want

Knowing the amount of debt you’re carrying tells you the loan amount you need to apply for.

If you haven’t already, use NerdWallet’s debt consolidation calculator to list out all your existing debts. You can also view your combined interest rate. Keep both these numbers in mind as you shop for the best debt consolidation loan.

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 through a process called pre-qualification.

Pre-qualifying just means filling out a short application and submitting to a soft credit check, which won’t hurt your credit score. You can then view your estimated rate with that lender. Almost all online lenders offer pre-qualification, and NerdWallet lets you pre-qualify with multiple lenders at once.

3. Submit your application

Once you’ve pre-qualified and chosen a lender, it’s time to officially apply for the loan. Most applications are online, and you’ll be asked to provide personal information. This may include 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 agreement, which you can usually sign electronically. Read any documents carefully before signing.

Lenders can deposit the funds directly into your checking 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-day 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.

How we chose the best personal loans

Our team of consumer lending experts follows an objective and robust methodology to rate lenders and pick the best.

35+

Lenders reviewed

We review over 35 lenders, including major banks, top credit unions, leading digital platforms and high interest installment lenders operating across multiple states.

25+

Categories assessed

Each lender is evaluated across five weighted categories and 29 subcategories, covering affordability, eligibility, consumer experience, flexibility, and application process.

60+

Data points analyzed

Our team tracks and reassesses hundreds of data points annually, including APR ranges, fees, credit requirements, and borrower tools, ensuring up to date, accurate comparisons.

Star rating categories

We evaluate more categories than competitors and carefully weigh how each factor impacts your experience.

Affordability

25%

We review lenders’ annual percentage rate offerings and the competitiveness of each lenders’ APR range. We also assess whether a lender charges an origination fee and any opportunity for borrowers to receive a rate discount.

Customer experience

20%

We consider the experience of the consumer trying to manage a personal loan, which means accessibility of customer service representatives, whether borrowers can choose and change their payment due date, and the ability to track their loan on a mobile app.

Underwriting and eligibility

20%

We consider the rigorousness of each lender’s underwriting practices and how widely available their loans are. This category includes whether a lender does a hard credit check before providing a loan, the range of credit profiles they accept and how many states their loans are offered in.

Loan flexibility

20%

We assess how flexible lenders can be with borrowers, including whether they offer multiple loan types, personal loan amounts and repayment term options and whether they offer direct payment to creditors on debt consolidation loans.

Application process

15%

We consider the lender’s full application process, including a borrower’s ability to preview their loan offer via pre-qualification, whether basic loan information such as APR range and repayment terms are available and easy to find online and how quickly a loan can be funded after approval.

5.0

Overall score

NerdWallet’s review process evaluates and rates personal loan products from more than 35 financial technology companies and financial institutions. We collect over 60 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.

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Other ways to tackle debt with bad credit

If you weren’t approved for a debt consolidation loan, or simply want to explore your options, the payoff methods below can also help you eliminate debt.

Credit counseling

When to consider this option: If you’d like outside help negotiating down your interest rates and can commit to a payoff plan for up to five years.

Credit counselors at a reputable non-profit can help negotiate a better rate on your debts and put you on a debt management plan. These plans help you get out of credit card debt in three to five years and come with only small monthly fees.

You’ll need to close any credit cards enrolled in the plan, though some organizations let you keep one card open for emergencies.

DIY debt payoff strategies

When to consider this option: If you have a manageable amount of debt (your total debt makes up 36% or less of your gross annual income) and prefer to tackle it on your own.

You can also 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 method, 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.

Debt settlement

When to consider this option: You have a large amount of debt (your total debt is 50% or more of your gross annual income) and don’t think you can repay the full amount.

Debt settlement is the process of settling your debts for less than you owe, usually with the help of a debt settlement company. This 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.

Settling debt hurts your credit score and can cost thousands in fees. There’s also no guarantee your creditors will accept settlement offers. We recommend exploring alternatives first.

Bankruptcy

When to consider this option: You have a large amount of debt (your total debt is 50% or more of your gross annual income) and no way to pay it off.

Bankruptcy is another option if you have an overwhelming amount of debt. Chapter 7 is the most common type and legally wipes out most unsecured debts. To qualify, you must pass the means test, which looks at your income, assets and expenses.

Similar to debt settlement, this option has serious consequences for your credit score — bankruptcy can stay on your credit report for 10 years — so consider it a last resort.