Michelle BlackContributor
Michelle Lambright Black, Founder of CreditWriter.com and HerCreditMatters.com,is a leading credit expert and personal finance writer with nearly two decades of experience in the credit industry. She’s an expert on credit reporting, credit scoring, identity theft, and the intersection of credit and financing. You can connect with Michelle onTwitter (@MichelleLBlack) and Instagram (@CreditWriter).
Lindsay VanSomerenContributor
Lindsay VanSomeren is a personal finance writer based out of Kirkland, Washington. Her work has appeared on Business Insider, Credit Karma, LendingTree, and more.
Michelle Black,
Michelle BlackContributor
Michelle Lambright Black, Founder of CreditWriter.com and HerCreditMatters.com,is a leading credit expert and personal finance writer with nearly two decades of experience in the credit industry. She’s an expert on credit reporting, credit scoring, identity theft, and the intersection of credit and financing. You can connect with Michelle onTwitter (@MichelleLBlack) and Instagram (@CreditWriter).
Lindsay VanSomeren
Lindsay VanSomerenContributor
Lindsay VanSomeren is a personal finance writer based out of Kirkland, Washington. Her work has appeared on Business Insider, Credit Karma, LendingTree, and more.
Contributor, Contributor
Jordan TarverLead Editor, Mortgages & Loans
Jordan Tarver has spent seven years covering mortgage, personal loan and business loan content for leading financial publications such as Forbes Advisor. He blends knowledge from his bachelor's degree in business finance, his experience as a top performer in the mortgage industry and his entrepreneurial success to simplify complex financial topics. Jordan aims to make mortgages and loans understandable.
Reviewed
Jordan Tarver
Jordan TarverLead Editor, Mortgages & Loans
Jordan Tarver has spent seven years covering mortgage, personal loan and business loan content for leading financial publications such as Forbes Advisor. He blends knowledge from his bachelor's degree in business finance, his experience as a top performer in the mortgage industry and his entrepreneurial success to simplify complex financial topics. Jordan aims to make mortgages and loans understandable.
Lead Editor, Mortgages & Loans
Reviewed
Updated: Apr 10, 2024, 2:16pm
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
A debt consolidation loan can be a smart way to streamline your monthly debt obligations and get out of debt faster. However, if you have bad credit, qualifying for a debt consolidation loan with an attractive interest rate could be a challenge.
If you have bad credit and high-interest debts you want to pay off, it’s worth considering your options. Bad credit consolidation loans might work well for certain debts, especially those with sky high interest rates like payday loans or title loans. Find our list of the best options below.
Why you can trust Forbes Advisor
Read more
Compare Personal Loan Rates
Best Debt Consolidation Loans for Bad Credit of 2024
- Upgrade – Best Overall Bad Credit Debt Consolidation Loan
- Universal Credit – Best for Comparing Multiple Offers
- Achieve – Best for Paying Off Credit Card Debt
- LendingClub – Best for Peer-To-Peer Lending
BEST OVERALL BAD CREDIT DEBT CONSOLIDATION LOAN
Upgrade
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
Minimum Credit Score
580
APR range
8.49% to 35.99%
Loan amounts
$1,000 to $50,000
Compare Rates
Compare rates from participating lenders via Forbes Advisor
580
8.49% to 35.99%
$1,000 to $50,000
Editor's Take
Upgrade was launched in 2017 and provides accessible online and mobile credit and banking services. Since that time, the platform has made more than $3 billion in credit available to over 10 million applicants and continues to expand its online and mobile services. Although maximum APRs are on the high end compared to other online lenders, Upgrade makes loans available to those with poor credit history.
Loans amounts, which range from $1,000 to $50,000. Upgrade has two- to seven-year terms available. Upgrade charges an origination fee between 1.85% and 9.99% of the loan, and borrowers will encounter a $10 fee if their payment is more than 15 days late or if the payment does not go through; there are no discounts for autopay. That said, Upgrade borrowers are not subject to a prepayment penalty, so you can reduce the overall cost of the loan if you’re able to pay it off early.
Beyond offering accessible personal loans, Upgrade streamlines the lending process with a mobile app that lets borrowers view their balance, make payments and update personal information. Upgrade’s Credit Heath tool also makes it easy to track your credit score over the life of your loan.
Pros & Cons
- Low minimum credit score requirement
- Borrowers can use loans to cover business expenses
- Offers direct lender payoff for debt consolidation loans
- High APR range
- Charges fees for origination, late payment and insufficient funds
Details
Overview: Upgrade was launched in 2017 and provides accessible online and mobile credit and banking services. Since that time, the platform has made more than $3 billion in credit available to over 10 million applicants and continues to expand its online and mobile services.
Upgrade charges an origination fee between 1.85% and 9.99% of the loan, and borrowers will encounter a $10 fee if their payment is more than 15 days late or if the payment does not go through; there are no discounts for autopay. That said, Upgrade borrowers are not subject to a prepayment penalty, so you can reduce the overall cost of the loan if you’re able to pay it off early.
Beyond offering accessible personal loans, Upgrade streamlines the lending process with a mobile app that lets borrowers view their balance, make payments and update personal information. Upgrade’s Credit Heath tool also makes it easy to track your credit score over the life of your loan.
Eligibility:
- Minimum credit score: 580
- No minimum income requirement
- Allows co-applicants
Loan uses:
- Debt consolidation
- Home projects
- Large expenses
- Business expenses
BEST FOR COMPARING MULTIPLE OFFERS
Universal Credit
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
Minimum Credit Score
580
APR range
11.69% to 35.99%
Loan amounts
$1,000 to $50,000
Compare Rates
Compare rates from participating lenders via Forbes Advisor
580
11.69% to 35.99%
$1,000 to $50,000
Editor's Take
Universal Credit is an online lending platform that offers personal loans between $1,000 to $50,000 through its partners. Repayment terms range from three to seven years.
While Universal Credit makes finding a personal loan accessible even to those with damaged credit, it comes with a few tradeoffs. First, it charges high APRs, well above the most competitive rates seen on our list. Second, Universal Credit charges a 5.25% to 9.99% origination fee on all personal loans. Because this is deducted from your loan proceeds, you’ll need to factor this in when determining your loan amount to ensure you receive the necessary amount after the fact.
Pros & Cons
- Flexible qualification requirements
- Next-day funding
- No prepayment penalty
- High APRs
- All personal loans charge a 5.25% to 9.99% origination fee
Details
Overview: Universal Credit is an online lender powered by Upgrade with loans originated by partners Cross River Bank and Blue Ridge Bank. The lender offers its loans in every state except Iowa, West Virginia and Washington, D.C.
Eligibility:
- Minimum credit score: 580
- Minimum income requirement: Does not disclose
- Doesn’t allow co-signers or co-borrowers
Loan uses:
- Debt consolidation
- Large expense
- Home project
Best for Paying Off Credit Card Debt
Achieve
4.0
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
Minimum credit score
620
APR range
8.99% to 35.99%
Loan amounts
$7,500 to $40,000
Via Fiona.com's Website
620
8.99% to 35.99%
$7,500 to $40,000
Editor's Take
Achieve is an indirect lending platform that offers personal loans underwritten by Cross River Bank or MetaBank. Founded in 2014, the lender is one of our top picks for debt consolidation loans because of the flexible loan terms (two to five years) and loan amounts ($7,500 to $40,000). These characteristics make it easier to consolidate a large amount of debt while spreading payments out over a lengthy period of time and reducing monthly payments.
Like some of our other top picks, Achieve also offers direct payment to creditors. In fact, borrowers who put 85% of the total loan amount toward debt consolidation via direct payment are more likely to qualify for a loan.
That said, depending on the interest rates on your current debts, the potentially high APR Achieve charges may make it more difficult to save money by consolidating. Likewise, the origination fee from 1.99% to 6.99% of the loan amount can make the loan more expensive. If you’re considering Achieve for debt consolidation, it’s important to do the math before you sign on the dotted line.
Pros & Cons
- Funds available within 48 hours
- Flexible repayment terms
- Allows co-borrowers
- Application is not entirely online
- Imposes a minimum income requirement
- High minimum loan amount
Details
Overview: Achieve is an indirect lending platform that offers personal loans underwritten by Cross River Bank or MetaBank. Like some of our other top picks, Achieve also offers direct payment to creditors. In fact, borrowers who put 85% of the total loan amount toward debt consolidation via direct payment are more likely to qualify for a loan.
That said, depending on the interest rates on your current debts, the potentially high APR Achieve charges may make it more difficult to save money by consolidating. Likewise, the origination fee from 1.99% to 6.99% of the loan amount can make the loan more expensive. If you’re considering Achieve for debt consolidation, it’s important to do the math before you sign on the dotted line.
Eligibility:
- Minimum credit score: 620
- Minimum annual income: $21,500
- Allows co-signers and co-applicants
Loan uses:
- Debt consolidation
- Home projects
- Medical expenses
- Travel costs
Best for Peer-to-peer Lending
LendingClub
3.5
Our ratings take into account loan cost, loan details, eligibility and accessibility, customer experience and application process. All ratings are determined solely by our editorial team.
Minimum credit score
600
APR range
9.57% to 35.99%
Loan amounts
$1,000 to $40,000
Compare Rates
Via Credible.com’s Website
600
9.57% to 35.99%
$1,000 to $40,000
Editor's Take
LendingClub is a peer-to-peer—or marketplace—lender founded in 2007. As the largest online lending platform for personal loans, LendingClub has worked with over 3 million customers and funded more than $55 billion in loans. It’s also one of the most geographically widespread options, with lending capabilities in every state except Iowa and the U.S. territories.
While LendingClub imposes high APRs and no autopay discount, applicants can choose to borrow between $1,000 to $40,000. This is a higher maximum loan cap than some other lenders. That said, LendingClub’s loan terms are limited to two to five years, which is less flexible than other lenders on our list. Borrowers also are charged an origination fee between 2% and 6% of the total loan amount, which is taken from the loan proceeds at funding.
LendingClub also makes debt consolidation easier by offering a balance transfer loan. With this type of loan, LendingClub offers direct payment to third-party lenders, including over 1,700 creditors. Not only does the platform take care of payments for you, you can choose exactly how much of your new loan amount you want LendingClub to pay toward each creditor.
Pros & Cons
- Will directly pay off third-party creditors as part of balance transfer loan
- Co-applicants permitted
- Available to borrowers with fair to excellent credit
- Origination and late fees
- Limited loan term availability
- High APR range
Details
Overview: LendingClub is a peer-to-peer—or marketplace—lender founded in 2007. As the largest online lending platform for personal loans, LendingClub has worked with over 3 million customers and funded more than $55 billion in loans. It’s also one of the most geographically widespread options, with lending capabilities in every state except Iowa and the U.S. territories.
LendingClub also makes debt consolidation easier by offering a balance transfer loan. With this type of loan, LendingClub offers direct payment to third-party lenders, including over 1,700 creditors. Not only does the platform take care of payments for you, you can choose exactly how much of your new loan amount you want LendingClub to pay toward each creditor.
Eligibility:
- Minimum credit score: 600
- Minimum credit history: Three years
- Allows co-applicants
Loan uses:
- Debt consolidation
- Home projects
- Medical expenses
Summary: Best Debt Consolidation Loans for Bad Credit Of April 2024
| Company | Company - Logo | Forbes Advisor Rating | Forbes Advisor Ratings | Minimum credit score | APR range | Loan amounts | Learn More CTA text | Learn more CTA below text | VIEW MORE |
|---|---|---|---|---|---|---|---|---|---|
| Upgrade |  | 4.0 |  | 580 | 8.49% to 35.99% | $1,000 to $50,000 | Compare Rates | Via Credible.com's Website | |
| Universal Credit |  | 4.0 | | 580 | 11.69% to 35.99% | $1,000 to $50,000 | Compare Rates | Via Credible.com's Website | |
| Achieve |  | 4.0 | | 620 | 8.99% to 35.99% | $7,500 to $40,000 | Compare Rates | Via Fiona.com’s Website | |
| LendingClub |  | 3.5 |  | 600 | 8.98% to 35.99% | $1,000 to $40,000 | Compare Rates | Via Credible.com's Website |
Tips for Comparing Bad Credit Debt Consolidation Loans
Below are three tips that can help you compare bad credit debt consolidation loans and find an offer that may work well for your situation.
- Get multiple quotes. It’s wise to shop around and compare offers from multiple lenders any time you’re searching for financing. Doing so could save you hundreds (maybe even thousands) of dollars on a debt consolidation loan. If you can find lenders that offer personal loan pre-qualification, you won’t risk any potential credit score damage from rate shopping.
- Don’t skip over the fine print. Getting a lower interest rate can be one of your biggest challenges if you’re shopping for apersonal loan with bad credit. But many people overlook the fact that loan origination fees can also make borrowing money more expensive. Be sure to review the fine print for any additional fees or costs associated with a potential loan so you can determine whether consolidating your debt with a particular lender makes sense.
- Do the math. If you can qualify for a debt consolidation loan with a lower interest rate than you’re paying on your existing debts, it could make sense to move forward. But it’s important to verify the savings potential before you make anything official. A personal loan calculatorcan help you compare how much you’re paying on your current debts to the potential costs of a new loan—both on a monthly basis and in terms of overall interest and fees.
Pro Tip
When comparing lenders that offer bad credit debt consolidation loans, be sure to review how the consolidation process works. Sometimes lenders ask for creditor information, and the lender uses funds to pay off creditors directly so you don’t have to worry about making payments. In other cases, you get the cash from the loan in a lump sum, and you have to distribute the cash to pay off your credit balances.
The Complete Guide To Bad Credit Debt Consolidation Loans
- What Is a Debt Consolidation Loan?
- How Does Debt Consolidation Work?
- Pros and Cons of Debt Consolidation
- Where to Get a Debt Consolidation Loan with Bad Credit?
- How to Qualify for a Debt Consolidation Loan with Bad Credit?
- How to Get a Debt Consolidation Loan With Bad Credit
- 3 Alternatives to Debt Consolidation Loans for Bad Credit
- Methodology
- Frequently Asked Questions (FAQs)
What Is a Debt Consolidation Loan?
A debt consolidation loan is a type of personal loan that can combine several existing debts in a single account. Once consolidated, you’ll have a single monthly payment to a new lender rather than multiple loan and credit card payments as before.
Debt consolidation might also save you money and could be good for your credit score in some situations. With credit card debt, in particular, using an installment loan to pay off revolving balances could lower your credit utilization rate and might improve your credit score as a bonus.
How Does Debt Consolidation Work?
When you take out a debt consolidation loan, you use the new loan to pay off one or more of your existing loans or credit cards. You then only have one payment to manage.
If you can’t make all of your debt payments, a debt consolidation loan can help you get a lower interest rate, making it easier to repay your balance. Along with a potentially lower interest rate, you can also choose a shorter term length, which will help you pay off your debt sooner. Alternatively, you may choose to take out a longer term loan. This makes each monthly payment smaller, but it can increase the total interest you pay over the life of the loan.
When choosing which route to go, it’s always recommended to select terms that you can afford monthly.
Pros and Cons of Debt Consolidation
Debt consolidation loans aren’t for everyone. Before accepting this financing, consider the pros and cons of debt consolidation:
Pros Of Debt Consolidation
- Simplify your debt. Rather than managing multiple debts, you’ll consolidate your payments into one monthly payment.
- Increase your credit score. Paying off credit card debt with an installment loan can help you increase your credit score, especially if you can avoid racking up a new balance on your credit card.
- Pay off debt sooner.If you get a lower rate and/or a shorter term length, you can pay off your debt ahead of schedule.
- Shrink your debt payments.A lower rate and/or a longer term length can help you shrink your monthly payments to a manageable level.
Cons Of Debt Consolidation
- Can reinforce bad habits.Once you pay off your credit cards, your full credit limit is available to spend again. Some people can’t resist the temptation to keep spending, and in this case, you can end up with twice the amount of debt you had before.
- Lower rates aren’t guaranteed. Interest rates are typically determined by what the lender currently offers and your creditworthiness, so it’s not guaranteed that you’ll get a lower rate on your new loan.
- Can interfere with financing large purchases. Taking on any new debt right before you apply for a big loan, like for a house or a car, can be a red flag to lenders and make it more difficult to get approved for other credit.
Where To Get a Debt Consolidation Loan With Bad Credit
Lenders use credit scores to predict risk. Unfortunately, traditional lenders like banks may not be comfortable issuing you a loan to consolidate your debt when you have bad credit. There are, however, some lenders that might work with you even if you have damaged credit.
Related: Debt Consolidation Loan vs. Balance Transfer Credit Card
1. Online Lenders
Online lenders may offer debt consolidation loans with more lenient credit score requirements. However, debt consolidation loans for bad credit tend to feature higher interest rates and sometimes fees to offset the added risk. If the interest rate you qualify for isn’t low enough, debt consolidation might not save you money.
2. Credit Unions
Credit unions are another resource to consider if you want to consolidate debt with a bad credit score. Compared with traditional banks, credit unions are often more willing to approve borrowers with less-than-perfect credit; however, they require membership. Nonetheless, you may have to shop around to find a local credit union or an online credit union that is willing to work with your situation.
How To Qualify for a Debt Consolidation Loan With Bad Credit
Consolidating higher-interest debt at a lower rate can be an effective way to pay off your debt faster and save money on interest. However, finding a personal loan with a lower rate than your current loan can be difficult.
If you’re looking to consolidate credit card debt, you may be able to find a lower APR than what you’re currently paying on your credit card. As of February 2024, the average credit card interest rate was 21.59% APR, according to the Federal Reserve. This rate is similar to what lenders offer personal loan applicants with bad credit.
As you prepare your application, there are ways to improve your chances of qualifying for an affordable debt consolidation loan:
- Check your budget. Develop a comprehensive budget to determine the maximum monthly payment amount you can afford.
- Review your credit report. Review your credit report and contact the credit bureaus if there are any errors. Correcting those mistakes can improve your credit.
- Research different lenders. Research your options and find different lender recommendations for bad credit. Pre-qualifying for a loan can show you the rates and terms you may qualify for without impacting your credit score, and a debt consolidation loan calculator can help you compare costs.
How To Get a Debt Consolidation Loan With Bad Credit
Whether you have bad credit or good credit, the basic loan shopping process is similar to get a consolidation loan.
- Start with a credit review. A lender will most likely review one of your credit reports and credit scores when you apply for a debt consolidation loan. So, you should check your credit from all three credit bureaus—Equifax, Experian and TransUnion—to ensure you meet the credit score requirements for a personal loan.
- Search for lenders that are a good fit. Let’s say your FICO credit score is 580. In this scenario, a lender that requires a credit score of 660 won’t work for you. But a lender with a minimum credit score requirement of 560 could make it onto your list of borrowing possibilities.
- Compare loan options. Some lenders allow you to pre-qualify and discover the personal loan interest rate they might offer you with a soft credit inquiry. Once you find loan options that might work for you, you can compare loans and narrow them down to the best deal.
- Submit an application. The final step to getting a debt consolidation loan is to fill out a lender’s official loan application. Provide the lender with any documents or information it requests right away to avoid potential problems.
3 Alternatives to Debt Consolidation Loans for Bad Credit
A debt consolidation loan for bad credit may not be the best choice for everyone. If your credit prevents you from qualifying for a lower interest rate than you’re paying now, you may want to consider the following alternatives to debt consolidation.
1. Improve Your Credit First
Good credit comes with many perks, including the ability to qualify for better financing. If you’re not in a position to lock in an attractive interest rate on a debt consolidation loan right now, working to improve your credit might give you more options in the future.
When creating your credit improvement plan, remember: You may want to adjust your approach depending on whether you’re building credit from scratch or working to rebuild damaged credit. Either process can take time, but the payoff from earning better credit can make your hard work worthwhile in the long run.
2. Use a Debt Payoff Strategy
If you have some wiggle room in your monthly budget, a debt payoff strategy might work well for you. Do-it-yourself strategies like the debt snowball or debt avalanche method cause you to restructure the way you pay down your debt each month. In the end, each approach has the potential to save you time and money in the debt elimination process.
3. Get Professional Help
Credit card debt and other high-interest debt can sometimes get out of hand. If you’re struggling to keep up with even the minimum payments on your monthly credit obligations, it might be time to talk to a financial professional about your situation.
A nonprofit credit counseling company may have solutions that could help you, including a debt management plan. In extreme cases, you may even want to seek advice from a bankruptcy attorney regarding plans that can provide you with protection from your creditors.
Find the Best Balance Transfer Credit Cards Of 2024
Learn More
Methodology
We reviewed 15 popular lenders based on 11 data points in the categories of loan details, loan costs, eligibility and accessibility, customer experience and the application process. We chose the best lenders based on the weighting assigned to each category:
- Loan cost: 30%
- Eligibility and accessibility: 25%
- Loan details: 20%
- Direct payment to creditors: 15%
- Customer experience: 10%
Within each category, we also considered several characteristics, including available loan amounts, repayment terms, APR ranges and applicable fees. We also looked at minimum credit score requirements, whether each lender accepts co-signers or joint applications and the geographic availability of the lender. Finally, we evaluated the availability of each provider’s customer support team.
Where appropriate, we awarded partial points depending on how well a lender met each criterion.
To learn more about how Forbes Advisor rates lenders, and our editorial process, check out our .
Frequently Asked Questions (FAQs)
What credit score is needed for a debt consolidation loan?
Every lender sets its own guidelines when it comes to minimum credit score requirements for debt consolidation loans. However, it’s likely lenders will require a minimum score between 580 and 680.
Credit score requirements can vary widely from one lender to the next. Therefore, it’s wise to find out each lender’s criteria before you apply for financing.
Does a debt consolidation loan hurt your credit?
Consolidating your debt has the potential to impact your credit score in positive and negative ways. Applying for a loan and adding a new tradeline to your credit report are both actions with the potential to damage your credit score.
On the other hand, debt consolidation should help you pay down your debt faster, reducing the number of accounts with balances on your credit report. This could give your credit score a boost.
How do I get out of debt with no money and bad credit?
Getting out of debt when you have limited resources and bad credit can be difficult. If you want to manage the process on your own, your best bet is to try to find ways to cut your expenses, increase your income or both.
However, if you’re in a financial position that feels hopeless or overwhelming, it might be time to consider more extreme measures. Credit counseling or even bankruptcy can provide alternative debt solutions that could deal with an unmanageable financial situation.
Is a debt consolidation loan a good idea?
If you find the right loan with favorable terms, debt consolidation can improve your finances. For example, if your new loan has a lower interest rate than your current loans and/or credit cards, you can reduce the overall cost of your debt. However, if your new loan has terms you can’t afford, such as larger monthly payments, it may not be the best choice for you.
How long does it take to get approved for a consolidation loan?
Approval for a debt consolidation loan is similar in duration to any other personal loan. Some lenders—especially online lenders—offer same-day funding, but it can still take a couple of days for your bank to process the deposit. However, most lenders take a few days to a week to make a loan decision, plus a few extra days to disburse your funds if you’re approved.
Next Up In Personal Loans
- Best Personal Loans
- Best Debt Consolidation Loans
- Best Personal Loans For Fair Credit
- Best Emergency Loans
- Best Low-Interest Personal Loans
- Best Fast Personal Loans
