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Best Debt Consolidation Loans for Bad Credit
If you have bad credit, or a FICO score below 670, getting a debt consolidation loan with a lower APR than your credit card can be a challenge, since traditional lenders charge higher rates to poor credit borrowers. Online lenders are sometimes more lenient, however.
Written by:Lindsay Frankel
If you’re up to your ears in debt, your debt utilization ratio can negatively impact your credit score. A personal loan to consolidate debt has the potential to save you money on interest and facilitate faster repayment so you can improve your score. However, you typically need good credit to get a good rate on a personal loan. Since lenders view credit score as an indication of how likely you are to repay your loan, they charge higher rates to borrowers with bad credit to make up for the risk.
Online lenders use a wider variety of information than traditional lenders to assess the likelihood of repayment. Some online lenders will offer debt consolidation loans despite your bad credit.
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Top Picks Best Debt Consolidation Loans for Bad Credit
- Upgrade — Best for Flexible Repayment Terms
- Upstart — Best for High-Interest Debt
- Oportun — Best for Secured and Cosigned Options
- LendingClub — Best for Joint Applications
- AmOne — Best for Loan Comparison
Because personal loans can have a big impact on your finances, it’s important to spend a little time reviewing your options to make sure you’re not overpaying. Also, it’s usually worth comparing your rates across multiple lenders to ensure you’re getting the best deal for your credit history and financial situation.
Our team of financial experts ranked lenders based on our ratings methodology for personal loans and found the best debt consolidation loans for bad credit. This ratings methodology evaluates lenders based on loan length, APR, repayment terms, user experience, customer service, credit score history, banking and credit union use, and additional features.
Best Debt Consolidation Loans for Bad Credit in 2023
Best Overall
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Upgrade — Best for Flexible Repayment Terms
APR.
5.94% to 35.97%
Loan Amount
$1,000-$50,000
Min. Credit Score
Not disclosed
Key Features
- Funding as soon as the next day
- Can be approved with fair credit
- Variety of discounts on rates
Pros & Cons
- Flexible repayment terms from 24 to 84 months
- Offers joint applications
- Fast funding within one business day
- No prepayment penalties
- Check your rate without hurting your credit
- Open to fair credit borrowers
- Charges an origination fee
- Charges a late payment fee
- Maximum APR is higher than most credit cards
Overview
If you’re approved for a debt consolidation loan from Upgrade, the lender can pay your creditors directly and even offer a rate discount if you choose this option. What’s more, you can choose from a variety of repayment terms to meet your budget needs.
Main Features
With Upgrade, you can borrow between $1,000 and $50,000 and repay the loan between 24 and 84 months. There is an origination fee between 2.9% and 8% of the loan amount, which will be deducted from the proceeds. APRs range from a low 5.94% (including the Autopay and direct payment discount) to a high 35.97%. Upgrade does not disclose minimum credit score or income requirements but is reportedly open to fair credit applicants. Funding typically happens within one business day after approval.
If you want to choose your term and not have to worry about paying off your other debts as well, Upgrade is a great option. Just do the math to ensure the APR you get when you prequalify will save you money on interest.
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Upgrade — Best for Flexible Repayment Terms
APR.
3.09% - 35.99%
Loan Amounts
$1,000-$50,000
Min. Credit Score
600+
Key Features
- Loans can be funded in one busines day
- Prequalification with a soft credit check
- Accepts borrowers with fair credit
Pros & Cons
- Open to borrowers with poor credit and no credit history
- Excellent customer service reviews
- Check your rate without hurting your credit
- No prepayment penalties
- Funding as soon as the next business day
- No prepayment penalties
- Pay off credit cards with direct payment to creditors
- No joint applications or cosigners
- Charges an origination fee
- Charges a late payment fee
- Only two term choices
- Average APR of 24.95% for five-year loans
Overview
Because Upstart is open to borrowers with poor credit and no credit history, it may be a good debt consolidation option for people who can’t qualify for a credit card but have other high-interest debt, such as payday loans.
Main Features
You can borrow between $1,000 and $50,000 from Upstart with your choice of a three or five-year term. APRs range from 5.22% to 35.99%, and there is an origination fee between 0% and 8% of the loan amount, depending on your creditworthiness. Funding time can happen in as little as one business day after approval. If you choose a credit card consolidation loan, Upstart can pay your creditors directly. Debt consolidation is also available for other loans, such as payday loans and title loans. The minimum credit score required is only 300, and you can also apply if you don’t have enough credit history to generate a score. But you can’t have any bankruptcies, public records, or delinquent accounts at the time of application, and your debt-to-income ratio must be less than 50% (45% in some states).
The average APR at Upstart is higher than the average credit card APR, which is 16.17%. But Upstart is ideal for poor credit borrowers who need to consolidate high-interest debt. You can prequalify without hurting your credit, so just make sure the rate you get will save you money before you formally apply. If you have good credit, you might also get a low enough rate from Upgrade to consolidate your credit cards.
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Oportun — Best for Secured and Cosigned Options
APR.
Up to 35.99%
Loan Amount
$300-$10,000
Min. Credit Score
580+
Key Features
- Fast funding with direct deposit
- Accepts borrowers with newer credit profiles or lower credit scores
- Flexible approved uses for the loan money
Pros & Cons
- Online financial education and resources
- Secured options available in three states
- Accepts cosigner
- No prepayment penalties
- Check your rate without hurting your credit
- Same-day funding for most applicants
- $20,000 maximum borrowing amount
- Charges an origination fee
- Charges a late payment fee
- Only one term option in some states
Overview
Offering up collateral makes it easier to borrow more money at a lower rate. Oportun offers the option for residents of California, Florida, and Texas to secure a personal loan with their car title. Oportun could also be a good option for poor credit borrowers looking to consolidate high-interest debt with an unsecured personal loan or those looking to apply with a cosigner.
Main Features
With Oportun, you can borrow between $300 and $10,000 (or up to $20,000 with collateral) with terms that vary by state but range from 12 to 48 months. APRs start at 7.99% in some states and are capped at 35.99%. Origination fees vary, and Oportun charges a late payment fee as well. Oportun doesn’t disclose a minimum credit score or income requirements but welcomes borrowers with poor credit, even those who have faced bankruptcy, as well as credit invisible borrowers.
Oportun is one of the few online lenders to accept co-signers (although two other lenders on our list do offer joint applications, which can make it easier to be approved). Oportun also offers secured options in a few states, which can be a great way to get a lower APR. With one of these options, bad credit borrowers can use a personal loan from Oportun to consolidate debt.
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LendingClub — Best for Joint Applications
APR.
7.04%-35.89%
Loan Amount
$1,000-$40,000
Min. Credit Score
Not Disclosed
Key Features
- Wide range of personal loans
- Co-signer option
- Soft credit pull
Pros & Cons
- Can pay creditors directly
- Joint applications allowed
- No prepayment penalties
- Can change your due date
- Check your rate without hurting your credit
- Funding typically takes three days
- Charges an origination fee
- Charges a late payment fee
- Only two term choices
Overview
LendingClub looks at both applicants’ credit information when deciding on joint applications, so if you’re applying with a creditworthy friend or family member, you may have a better chance of getting a low rate. LendingClub also offers direct payment to creditors and is reportedly accepting of fair credit borrowers applying on their own.
Main Features
You can borrow anywhere from $1,000 to $40,000 from LendingClub and repay the loan over a 36 or 60-month term. LendingClub charges an origination fee between 3% and 6% of the loan amount, which will be deducted from the proceeds you receive. APRs range from 6.34% to 35.89%. Most approvals happen within 24 hours and funds are received two days after that, so LendingClub isn’t a good emergency option, but the lender will pay your creditors directly for debt consolidation loans. LendingClub doesn’t disclose minimum income or credit score requirements, but several sources suggest that you’ll need a FICO score of 600 or higher to be approved.
LendingClub is a great option for bad credit borrowers applying with a creditworthy co-borrower or looking to consolidate high interest debt. APRs will likely be higher than most credit cards for fair credit borrowers applying on their own, however.
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AmOne — Best for Loan Comparison
APR.
4.37%-35.99%
Loan Amount
$100-$50,000
Min. Credit Score
550+
Key Features
- Variety of personal and business loans
- Fast application process
- Loans are available for borrowers with low credit scores
Pros & Cons
- Excellent customer service reviews
- Compare multiple top lenders in one place
- Friendly to fair credit borrowers
- Flexible term options ranging from 12 to 84 months
- APRs starting at just 2.49%
- Check your rate without hurting your credit
- Loan consultants available to assist
- Funding in as little as one business day
- Some lenders on the platform charge an origination fee
- APRs vary by lender and can be high
- No mobile app
- May receive phone calls from lenders
Overview
Of all the loan comparison platforms out there, AmOne is our top pick for bad credit borrowers. You can compare rates for multiple debt consolidation loans with just one application. Rates start low, fair credit borrowers are welcome to apply, and you can check your rate without hurting your credit.
Main Features
If you need to borrow between $100 and $50,000 and want to see what’s available to you based on your credit score, AmOne lets you check your rate with multiple lenders by entering your personal information just once. APRs and terms vary by lender, but you may have the option of a repayment term as short as 12 months or as long as 84 months. APRs start at 2.49% and are capped at 35.99%. AmOne doesn’t specify minimum income or credit score requirements, but notes that there are options for borrowers with scores between 500 and 850.
If you need an online debt consolidation loan and have bad credit, AmOne is a great place to start. With one quick rate check, you can compare a handful of different lenders. Just keep in mind that you’ll be sharing your personal information with each lender on the platform, which may lead to calls from lenders that don’t interest you.
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How to Choose the Best Debt Consolidation Loans for Bad Credit
Our experts used the following parameters when selecting our top picks for the best bad credit debt consolidation loans. As you compare options, it’s a good idea to consider these factors yourself:
- Loan features: Make sure the lender offers the amount you need and a repayment term that provides an affordable monthly payment for you. Also check for any limitations on how you can use the loan.
- Interest rates and fees: Aim for the lowest APR and the fewest fees that you can qualify for based on your credit history, and avoid any lenders that charge prepayment penalties.
- Application process: Evaluate the ease of the process, whether the lender allows you to check your rate with a soft credit pull, and the funding time if it matters to you.
- Qualification process: Eliminate any lenders you don’t qualify for based on minimum credit score and income requirements. Also pay attention to membership requirements. And if you need to apply with another borrower, make sure the lender you choose allows it.
- Customer support: Ensure you will be able to reach customer support at a time and through a channel that is convenient for you.
- Online user reviews: Look for any repeated complaints and check for overall customer satisfaction with the lenders you are considering.
- Perks and bonuses: Some lenders may offer payment flexibility, which can appeal if your budget is strained. Others may offer advanced technology that you can make use of. Pay attention to any extras provided as you narrow down your choices.
Main Features of The Best Debt Consolidation Loans for Bad Credit
| Company | Est. APR | Min. Credit Score | Loan Amount | Loan Term |
| Upgrade | 5.94% to 35.97% | Undisclosed | $1,000 to $50,000 | 24 to 84 months |
| Upstart | 5.22% to 35.99% | 300 | $1,000 to $50,000 | 36 or 60 months |
| Oportun | 7.99% to 35.99% | Undisclosed | $300 to $20,000 | 12 to 48 months |
| Lending Club | 6.34% to 35.89% | Undisclosed | $1,000 to $40,000 | 36 or 60 months |
| AmOne | 2.49% to 35.99% | Undisclosed | $100 to $50,000 | 12 to 84 months |
Where Can You Get a Debt Consolidation Loan with Bad Credit?
- Banks: Your local bank may be able to offer you a debt consolidation loan, but banks typically have stricter criteria for approval than online lenders or even credit unions.
- Credit Unions: A credit union can be a good option for a debt consolidation loan, but not all credit unions will lend to borrowers with bad credit, and there are typically membership requirements associated with these loans.
- Online Lenders: Online lenders use a wider array of information and rely on technology when making decisions, so they’re typically more lenient with bad credit borrowers. Plus, they offer a more convenient online process with faster funding.
What Credit Score Do You Need for a Debt Consolidation Loan?
That depends. The goal with a debt consolidation loan is to get a lower APR than you are currently paying your creditors. If you have high-interest debt like payday loans or title loans, you may be able to consolidate that debt and save with a loan from a lender like Oportun or Upstart, even if you have bad credit or no credit history. However, to beat the average APR on a credit card, you’ll likely need good credit, or a FICO score of 670 or above. If you have fair credit, applying with collateral, a co-signer, or a joint applicant may help you get a rate low enough to beat your current credit card APR.
How to Get a Debt Consolidation Loan with Bad Credit
- Check your credit: Look at your free credit report to see where you stand, and dispute any errors.
- Narrow down your options: Start with this list and eliminate any options you don’t qualify for.
- Prequalify: Check your rate with any remaining lenders. This will only require a soft credit pull and will not harm your score.
- Select a lender: Choose the lender offering the lowest APR and fill out a formal application, supplying additional documentation as needed.
- Sign and accept: Once you’re approved, read the fine print, make sure you understand the terms, and sign your loan documents online.
- Receive the funds: Wait for the funds to be deposited into your bank account, which will typically happen within a few days.
What Are the Dangers of Debt Consolidation Loans with Bad Credit?
- Damage to your credit: A formal application for a debt consolidation loan will cause a small decrease in your credit score. Your score will recover quickly, but if you’re not approved, you may have even more difficulty with your next application for credit.
- Qualification issues: If you can’t get a lower APR than you’re currently paying, a debt consolidation loan is not worth it. Always do the math to make sure you’ll be actually saving money.
- Cosigner/joint applicant issues: If you need to apply with another borrower or co-signer to get a low enough rate, defaulting on the loan could damage your relationship with that person as well as their finances.
- Loss of collateral: If you need to put up collateral such as your vehicle title to secure a loan, you’ll risk losing that asset.
What to Do If You’re Not Approved
If you’re not approved, you have the option of applying with another lender that has more lenient eligibility criteria. If you still can’t get a loan or can’t get a low enough rate to make the loan worthwhile, the best thing to do is to pick a debt repayment strategy to use until your credit score improves. The fastest and cheapest method of paying off debt is the debt avalanche method, which involves tackling your high-interest debts first. You should reevaluate your budget and try to make room for extra payments to support this strategy. When your credit score improves, you can try applying for another debt consolidation loan.
How to Improve Your Credit Score
- Dispute any errors currently on your credit report
- Always pay at least the minimum payment amount by the due date
- Make extra payments to pay down debt and reduce your utilization ratio
- Ask for a credit limit increase to reduce your utilization ratio
- Avoid applying for new credit unless it’s necessary
- Avoid closing any old accounts unless you’re trying to avoid fees
- Consider debt consolidation or a balance transfer if it will help you pay down debt faster
Alternatives to Debt Consolidation Loans
- Balance Transfer Credit Card: Some credit cards offer a 0% introductory APR, which can be a good option if you can manage to repay your debt within 18 months. You’ll likely pay a balance transfer fee but will still save money on interest.
- Home Equity Loan or HELOC: These are forms of financing secured by the equity in your home. They’re often easier to qualify for than personal loans.
- 401(k) Loans: If your plan sponsor offers 401(k) loans, you can borrow from yourself to pay off debt without a credit check.
- Credit Counseling: Consider seeking help from a nonprofit credit counselor, who can help you get lower interest rates on your debts.
- Debt Settlement: You can offer to settle the debt for less than you owe, either on your own or with the help of a debt settlement company. We don’t recommend this option unless you are already several months delinquent and have a lump sum you can personally offer your credit card issuer. Debt settlement companies charge high fees and don’t always get results.
- Bankruptcy: This legal process can wipe out most of your debts, but it will destroy your credit, making life difficult in other ways.
Conclusion
Getting a debt consolidation loan with bad credit might feel impossible, but you have options. Take advantage of opportunities to lower your rate by putting forth collateral or applying with another borrower or co-signer. And prequalify with several lenders to make sure you’re getting the lowest rate before you apply. Finally, remember to calculate the total interest you’ll pay with and without the loan. If you can save money, it’ll be worth consolidating your debt. Always choose a repayment term you can afford, but don’t be afraid to make extra payments when you can — none of the lenders on our list charge prepayment penalties, and the sooner you can get out of debt, the better it’ll be for your credit.
Frequently Asked Questions(FAQ)
Can You Get a Debt Consolidation Loan with a 500 Credit Score?
Are Debt Consolidation Loans Bad for Your Credit?
Can I Get a Debt Consolidation Loan with a 640 Credit Score?
Can I Get a Debt Consolidation Loan with a 580 Credit Score?
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Read MoreAbout the Author
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Lindsay Frankel
Lindsay Frankel is a Denver-based freelance writer specializing in personal finance. She covers topics such as loans, insurance, credit cards, budgeting, and more.
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