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Best Debt Consolidation Loans for Bad Credit

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Upgrade is our top choice for the best debt consolidation loans for bad credit, with flexible loan amounts and repayment terms, as well as the option to apply with a creditworthy co-applicant. We researched 70 personal loan lenders and evaluated them on 31 factors, including cost, loan terms, borrower requirements, and additional features.

Best Debt Consolidation Loans for Bad Credit of 2024

Best Overall : Upgrade

The Balance's Rating
4.6

Upgrade
  • APR Range: 8.49%–35.99%
  • Loan Amount: $1,000–$50,000
  • Loan Terms: 24–84 months
Why We Chose It

Upgrade requires a credit score of 620 or higher to get approved, which is solidly in the fair credit range. But unlike some other online lenders, Upgrade allows you to add a joint applicant and will consider both your credit histories to make a decision. If you don't have someone to apply with, you could use your car to secure a loan and improve your approval odds and loan terms. Before you try, though, get prequalified to get an idea of your chances.

Upgrade offers relatively flexible loan amounts and competitive interest rates. Once you accept a loan offer, you can receive the funds in one business day, but you can also ask the lender to pay off your debts directly. You'll even get an interest rate discount if you opt for that. 

You can also get a rate discount for setting up autopay during your application. Note, however, that the lender charges an origination fee of 1.85% to 9.99% of the loan amount.

Pros & Cons
Pros
  • Allows joint applications

  • Offers direct payoff

  • Next-day funding available

  • Multiple interest rate discounts

Cons
  • Requires fair credit

  • Charges an origination fee

  • High maximum APR

  • May require collateral

Qualifications
  • Minimum credit score of 620
  • At least the age of majority in your state and able to enter into a binding contract
  • United States citizen, eligible permanent resident, or non-permanent resident alien with a valid visa
  • Available in all 50 U.S. states and Washington, D.C.

Best Credit Union : Bethpage Federal Credit Union

The Balance's Rating
4.4

Bethpage Federal Credit Union
  • APR Range: 9.79%–18.00%
  • Loan Amount: $1,000–$35,000
  • Loan Terms: 12–84 months
Why We Chose It

Bethpage Federal Credit Union is another lender that requires fair credit to get approved, but you can get prequalified to gauge your odds. If you're unable to get approved on your own, you can apply with a joint applicant.

As a credit union, Bethpage has a lower maximum interest rate than online lenders and traditional banks, which improves your chances of saving money on interest. What's more, it doesn't charge an origination fee, which is common among bad-credit personal loans.

If you're approved, you can receive the funds as soon as the same day—though it can take a day or two in some cases. You can also opt to have the credit union pay off your creditors directly.

One thing to consider before you apply, though, is that Bethpage may not report your payments to all three credit bureaus, which could make it more difficult to build credit with a loan from the lender. You'll also need to be a member of the credit union to get approved, but anyone can join with a $5 savings deposit.

Pros & Cons
Pros
  • Allows joint applications

  • Offers direct pay

  • No origination fee

Cons
  • Membership required

  • Requires fair credit

  • No interest rate discounts

  • May not report to all three credit bureaus

Qualifications
  • Minimum credit score of 650
  • Must be a current Bethpage member or become one during the application process
  • Available in all 50 U.S. states and Washington, D.C.

Best With No Late Fees : Happy Money

The Balance's Rating
4.4

Happy Money Logo
  • APR Range: 11.72%–17.99%
  • Loan Amount: $5,000–$40,000
  • Loan Terms: 24–60 months
Why We Chose It

If you've made some progress on rebuilding your credit, a Payoff Loan from Happy Money may be within reach. The lender requires fair credit to get approved and doesn't allow co-signers or joint applicants. But you can get prequalified to get an idea of your approval odds.

Happy Money offers a lower maximum interest rate than some of the other lenders on our list, and it doesn't charge a fee for late payments. The Payoff Loan is designed only for debt consolidation, so direct payoff is the default.

However, its minimum loan amount is a bit high. Also, note that the origination fee can range from 1.5% to 6.25% of your loan amount. Loans are not available in Massachusetts or Nevada.

Pros & Cons
Pros
  • Low maximum interest rate

  • Offers direct payoff

  • Transparent about eligibility criteria

Cons
  • Requires fair credit

  • Charges an origination fee

  • No interest rate discounts

Qualifications
  • Minimum credit score of 640
  • No current delinquencies
  • Must live in a state where the lender operates (excludes Massachusetts and Nevada)

Best for Low Minimum Credit Requirement : Upstart

The Balance's Rating
4.1

Upstart Personal Loan Review

Upstart Personal Loan Review

  • APR Range: 7.80%–35.99%
  • Loan Amount: $1,000–$50,000
  • Loan Terms: 36–60 months
Why We Chose It

Upstart can be a great option if you have bad credit and no co-signer. The lender's minimum credit score is 300—the lowest possible credit score—and it doesn't allow co-signers or co-applicants. You may even be able to get approved with no credit history at all.

That said, the lender's maximum interest rate is relatively high, and the origination fee can be as high as 12% of your loan amount. You'll also have fewer repayment term options compared to other lenders. 

If you're approved, you may receive the funds as soon as the next business day, but Upgrade does not offer direct payments to creditors.

Pros & Cons
Pros
  • Next-day funding available

  • Available to people with bad credit or no credit

  • Flexible loan amounts

Cons
  • Origination fee can be extremely high

  • Doesn't allow co-signers or joint applications

  • Limited repayment terms

  • Doesn't offer direct payoff

Qualifications
  • Minimum credit score of 300; if you have no credit score, you may qualify if you've graduated from or are currently enrolled in an associate degree program at an accredited school, a four-year accredited college, or a more advanced degree-granting program
  • Available in all 50 U.S. states and Washington, D.C. 
  • Must be a U.S. citizen or permanent resident
  • Must be at least 18 years old
  • Must have a verifiable name, Social Security number, and birth date
  • Must have a job or a job offer you've accepted and will start within six months or another verifiable source of income

Best for Fast Funding : TD Bank

The Balance's Rating
3.8

TD Bank

TD Bank

  • APR Range: 8.99%–23.99%
  • Loan Amount: $2,000–$50,000
  • Loan Terms: 36–60 months
Why We Chose It

TD Bank doesn't have a minimum credit score requirement for its personal loans. That doesn't mean you're guaranteed to get approved, though, and the lender doesn't allow co-signers or joint applications. Be sure to get prequalified before you submit an official application.

If you do get approved, TD Bank offers a low maximum interest rate and no origination fee. You'll also receive your loan funds in as little as one business day—though the lender doesn't offer direct payoff. 

The biggest drawback, though, is that TD Bank personal loans are only available in 15 states and the District of Columbia. Eligible states are Connecticut, Delaware, Florida, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Vermont, and Virginia.

Pros & Cons
Pros
  • No minimum credit score requirement

  • Low maximum interest rate

  • No origination fee

Cons
  • Only available in a handful of states

  • Doesn't allow co-signers or joint applications

  • Doesn't offer direct payoff

Qualifications
  • No minimum credit score
  • Must live in a state where the lender operates

Best for Refinancing : First Tech Federal Credit Union

The Balance's Rating
4.7

First Tech Federal Credit Union Logo

First Tech Federal Credit Union Logo

  • APR Range: 8.94%–18.00%
  • Loan Amount: $500–$50,000
  • Loan Terms: 24–84 months
Why We Chose It

First Tech Federal Credit Union requires fair or good credit to get approved, but if you don't meet the lender's requirements on your own, you can apply with a joint applicant. You can also opt for a secured personal loan.

The lender is particularly worth considering for smaller debts, as its loan amounts start at just $500. You'll also get a wide range of repayment terms and a low maximum interest rate. Like some of our other top choices, it doesn't charge an origination fee.

If you get approved, you can receive the funds as soon as the same day or request a direct payment to your creditors. The credit union also offers debt protection, which can cancel some of your payments or even the full loan amount if you die, become disabled, or lose your job involuntarily.

You must become a First Tech member to get approved, but anyone can join.

Pros & Cons
Pros
  • Same-day funding available

  • Offers direct payoff

  • Low minimum loan amount

  • No origination fee

Cons
  • Requires fair credit

  • Membership required

  • No interest rate discounts

Qualifications
  • Credit score of 660 or higher
  • Be a First Tech member, or join during the application process

The Bottom Line

Debt consolidation can help you save money on interest and accelerate your payoff plan. As you consider your options, Upgrade is our top choice overall, especially if you have a joint applicant or want a secured loan.

Other lenders that can be a good fit with a joint applicant include Bethpage Federal Credit Union and First Tech Credit Union. First Tech also offers secured personal loan options. If you're looking for a lender with less stringent credit requirements, consider Upstart or TD Bank. And if you're working toward fair credit, Happy Money should be on your radar as well.

Guide to Choosing the Best Debt Consolidation Loan for Bad Credit

What Is a Debt Consolidation Loan and How Does It Work?

A debt consolidation loan is a type of personal loan that you can use to pay off high-interest debt, such as credit card balances or payday loans. 

Debt consolidation loans offer fixed repayment terms, which may range anywhere from one to seven years. You'll receive the lump-sum amount upfront or have the lender use the funds to pay off your creditors directly. 

Depending on the lender and your application details, you may qualify for a lower interest rate than what you're currently paying—although options may be limited if you have bad credit and no co-signer or collateral. Note, however, that some debt consolidation loans charge an upfront origination fee, which is deducted from your loan disbursement.

Where to Get a Debt Consolidation Loan

You can consolidate debts with a variety of lenders. Here's a quick summary of your options:

  • Small banks and credit unions: You may have a hard time getting approved with national banks, but regional and community banks and credit unions may be a good option because you can often speak with a loan officer about your situation. That person can review your finances, provide suggestions, and possibly request exceptions that get your loan approved. Credit unions, in particular, tend to have a community focus, and they may be especially likely to help out when you have bad credit.
  • Online lenders: Online lenders keep overhead costs low and may use technology to take a creative look at your finances. It’s easy to apply for a loan with these lenders, making it relatively easy to compare rates and fees. As you shop among lenders, find out if checking your rate will affect your credit—too many inquiries could lower your score and make it harder to borrow.

How To Compare Debt Consolidation Loans for Bad Credit

It's important to take your time to shop around and compare multiple loan options before submitting an application, particularly if you have bad credit and have a limited selection to begin with. 

Some of the features to consider include:

  • APR: The annual percentage rate of the loan is an annualized representation of the total cost you'll pay each year. In addition to the interest rate, it also includes the origination fee and certain other charges.
  • Loan amounts: Minimum and maximum loan amounts will vary by lender, so make sure the ones you're considering offer the amount you're looking for.
  • Origination fee: Some lenders charge high origination fees to borrowers with bad credit, which could force you to borrow more just to cover your debt balances. If you have a co-signer or joint applicant, look for lenders that charge low origination fees or no upfront fees at all.
  • Credit requirements: Make sure you understand what's required before you submit an application. Some lenders disclose this information publicly, while others may require you to get prequalified to gauge your approval odds.
  • Co-signer and co-borrower options: Even if you can get approved for a debt consolidation loan on your own, you may be able to get better terms with a creditworthy co-signer or joint applicant. 
  • Availability: Not all lenders operate in every state, so make sure the ones you're looking at offer loans where you live.

It can be tough to get approved for favorable terms with bad credit. But some of our top choices allow you to apply with a joint applicant or co-signer or have less stringent credit requirements than most personal lenders. Be sure to compare interest rates, origination fees, repayment terms, and other factors to determine which one is the best fit.

How To Qualify For and Apply For a Debt Consolidation Loan for Bad Credit

When applying for a debt consolidation loan, lenders will review several pieces of information about you to make a decision, including the following:

Other requirements may include citizenship status, age, bank account ownership, state of residence, and more. To improve your odds of getting approved with favorable terms, here are some steps you can take:

  1. Get prequalified: Most personal loan companies allow you to get prequalified before you apply. This process doesn't impact your credit score and can give you an idea of your approval odds and potential loan terms. Try to go through this process with at least three lenders.
  2. Compare your offers: Once you have rate quotes from multiple lenders, review each one and compare them based on the features that are most important to you. That may include the interest rate, origination fee, repayment terms, and eligibility requirements, among others.
  3. Apply online: Most lenders allow you to submit an application online. You'll provide some details about yourself—and your joint applicant, if applicable—and your desired loan terms. You may also need to provide some documentation for your identity, income, and employment. 
  4. Review and accept the loan offer: The lender will review your submitted application and provide you with a decision. If you're approved, read through the loan agreement, so there aren't any surprises. Then, decide whether you want to receive the loan funds directly or have them sent to your creditors directly to pay off your debt.

Alternatives to a Debt Consolidation Loan

Trying to get a new loan with bad credit can be difficult. It’s hard to get approved, and you might only get offers at high rates—possibly equally as high as the rates you’re paying now. As a result, it’s smart to explore all of the alternatives:

  • Cut costs: You already may have done all the cutting you can, but take a close look at where your money goes each month. Track your spending with a pen and paper or a budgeting app, and identify potential areas for saving. 
  • Look into debt payoff methods: A relatively simple (but not necessarily easy) approach might be to pay down your debts as they stand. Pay more than the minimum whenever you can, and put every spare dollar toward your debts until they’re gone. You can also take a look at the debt snowball and debt avalanche methods to see if they're a good fit for your situation.
  • Debt management plan: A debt management plan from a credit counseling agency might offer the relief you need. Instead of getting a new loan, you may be able to negotiate with creditors to secure a lower monthly payment, lower interest rate, or other forms of relief. 
  • Debt relief company: "Debt relief company" is a broad term that includes businesses that specialize in credit counseling, debt management, debt consolidation, and debt settlement. In most cases, these experts can help you decide if debt consolidation is the right option for you.
  • Bankruptcy: If you have no other options, it may be worth speaking with a bankruptcy attorney. A court might be able to prevent creditors from pursuing you as long as you meet certain conditions.

Frequently Asked Questions

  • When does debt consolidation make sense?

    Consolidating debts may make sense when you come out ahead financially. Start by looking at how much you’ll pay overall with your current debts, including monthly payments and total interest costs. You can get those numbers with online calculators or other tools.

    Next, crunch the numbers on a debt consolidation loan using the new loan amount and interest rate. Examine how much you’ll pay in interest each month and over the remaining life of each loan. If you’ll save money, consolidating your debts may be the right move.

  • How should I choose a personal loan for debt consolidation?

    It's important to take your time to shop around and compare personal loans from multiple lenders to determine which one is the right fit for you. 

    Look at loan options from a variety of lenders, including online lenders, banks, and credit unions. Go through the prequalification process with a few lenders so you can get a good estimate of what each can offer you, then apply with the lender that offers the interest rate and other loan terms that work best for you.

  • Does debt consolidation hurt your credit?

    Debt consolidation can negatively impact your credit, but as long as you manage the debt well, it's only temporary. 

    For starters, the hard inquiry a lender runs when you apply may knock a few points off your credit score. Opening a new credit account can also have a temporary negative impact on your score, particularly because it reduces the average age of your accounts. But again, this is usually temporary.

    Missing a payment by 30 days or more can have a significant negative impact on your score. But if you pay your bill on time and in full every month, you can use a debt consolidation loan to improve your credit over time.

  • How long does debt consolidation stay on your credit file?

    Positive information from a debt consolidation loan will remain on your credit reports for 10 years after you pay off the account. However, if you miss a payment by 30 days or more or default on the debt, that derogatory mark will stay on your credit file for seven years from the original delinquency date.

    When you first apply for a debt consolidation loan, the hard credit inquiry the lender runs will remain on your credit reports for two years, but it'll only affect your FICO credit score for half that time.

Methodology

To evaluate and rank personal loan providers we collected hundreds of data points across 70 lenders, including traditional banks, credit unions, fintechs, and special interest finance companies. We researched and evaluated APRs, loan amounts and terms, fees, customer experience, and much more. To rank the lenders in our database and to generate star ratings, we weighted the data we collected, based in part on what consumers told us were the most important features of a personal loan and lender in a survey we conducted. We grouped those factors into four broad areas:

  • Loan costs (advertised APR, fees, and six other factors): 29.25%
  • Loan terms (loan amount, repayment term, and three other factors): 22.25%
  • Borrowing requirements (credit score, membership requirement, and six other factors): 28.5%
  • Additional features (online application, prequalification, and eight other factors): 20%

Learn more about how we evaluated personal loans in our complete methodology.

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Debt Consolidation Loan Application Form with pen, calculator

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