Everything seems to be more expensive these days, so it’s no surprise that consumers are racking up more debt. In fact, the Federal Reserve reported that the total amount of revolving credit in early 2024 was up more than 10% from the previous year.
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Consolidating your debt can be a helpful way to save money and pay off your credit card (or other high-interest) balances faster. But if you have less-than-perfect credit, finding a lender willing to work with you can be challenging (particularly if you’re trying to get approved by a federal credit union that caps APRs at 18%).
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Fortunately, some lenders may be able to help, even if their maximum APR negates any savings from consolidation. We’ve identified the best debt consolidation loans for bad credit based on their available loan amounts, repayment term options, rates, fees and, yes, eligibility criteria.
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Featured Offer
SoFi
APRs
8.99% to 25.03%*
Loan amount
$5,000 to $100,000
Minimum credit score
680
Methodology
To determine the best debt consolidation loans for borrowers with bad credit, CNN Underscored Money editors and data researchers judged nearly 30 widely available and popular lenders across more than two dozen criteria. The lenders that earned the highest out-of-five ratings offer the most competitive rates and fees, flexible repayment options and accessible eligibility standards. View our complete methodology below.
- 27 companies reviewed
- 702 data points analyzed
- 26 features considered
- 31 primary data sources
Show summary
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LendingClub
: Best loan for debt consolidation with bad credit
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Upgrade
: Best for secured loans
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SoFi
: Best for borrowing with a co-applicant
-
Prosper
: Best peer-to-peer lender
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LendingPoint
: Best for competitive rates
-
Discover
: Best for repayment flexibility
-
Achieve
: Best for extra discounts
-
Upstart
: Best for limited credit history
-
Avant
: Best for short loan terms
-
Happy Money
: Best for low APR ceiling
LendingClub
Best loan for debt consolidation with bad credit
Fixed APRs
8.98% to 35.99%*
Loan amount
$1,000 to $40,000
Minimum credit score
600
Why we picked it
LendingClub is the best overall lender for debt consolidation loans for borrowers with poor credit because it has a relatively low credit score requirement, and it also accepts co-borrowers. Adding a co-applicant will increase your odds of qualifying for a loan and securing a competitive rate.
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Unfortunately, if you (or your co-applicant) narrowly clear the credit threshold, anticipate a credit card-like APR close to 35.99%. Before borrowing from an online lender with such an APR ceiling, consider federal credit unions (or marketplaces like Happy Money, below) that cap rates at 18% for approved borrowers with the lowest possible credit scores.
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While some lenders require you to borrow $5,000 or more, LendingClub has a lower-than-average loan minimum of just $1,000, making it a good option if you have a smaller amount of debt to consolidate.
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Related >> Best small personal loans
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However, LendingClub charges origination fees as high as 8%. Plus, if you’re looking for a longer term of six or seven years to reduce your monthly payments, you’ll have to work with another lender — LendingClub only offers terms between two and five years.
Pros
- Low loan minimum
- Co-borrowers accepted
- Will pay creditors directly
Cons
- Origination fees
- Four loan term options
- May take longer than competitors to process and disburse loan funds (“a few days”)
- High maximum APR
- No autopay discount
Who should consider it
If you have $40,000 or less of high-interest credit card debt and have a parent or relative with good credit willing to act as a co-applicant, you may be a good candidate for LendingClub.
*Rates as of May 8, 2024
Upgrade
Best for secured loans
Fixed APRs
8.49% to 35.99%*
Loan amount
$1,000 to $50,000
Minimum credit score
580
Why we picked it
Upgrade has a lower credit score minimum than most lenders, making it one of the easiest personal loans to get. It also accepts joint applications, so you can improve your odds of qualifying for a loan (at a good rate) by adding a creditworthy co-borrower to your application. However, what really makes Upgrade stand out is its secured loan option.
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Depending on your credit and debt-to-income ratio, you may be eligible for an auto-secured loan. With this loan option, your car serves as collateral. Because the loan is secured, you may qualify for a larger loan amount or lower rate than you’d otherwise receive. To qualify, your vehicle must be 20 years old or newer, insured, registered in your name and have a clean title that’s free of liens — so if you’re still paying off your car, it can’t be used to back the loan.
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Like many debt consolidation lenders, Upgrade will repay your creditors directly. But as an added perk, it also offers a rate discount if you enroll in the Debt Payoff option for at least some of your existing debt. (However, the lender doesn’t specify the value of the discount.)
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Related >> Best secured personal loans
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But Upgrade may not be the best lender for everyone; it charges origination fees (1.85% to 9.99% of the loan amount) and, if you’re self-employed, there are stricter application and documentation requirements. Be wary of its maximum APRs, and investigate rate ceilings with competitors, particularly credit unions, before zeroing in on Upgrade.
Pros
- Low loan minimum
- Six loan term options available (2 to 7 years)
- Secured loan option
- Joint applications accepted
- Funding within one day of approval
- Can pay creditors directly
- Rate discount for direct creditor repayment
Cons
- Charges origination fees
- Stricter requirements for self-employed applicants
- High maximum APR
- Vehicle must be paid off to serve as collateral
Who should consider it
If you’ve struggled to qualify for a debt consolidation loan with other lenders and own a car, Upgrade’s auto-secured loans may be a useful solution.
*Rates as of May 8, 2024, assume autopay and direct creditor repayment discounts
SoFi
Best for borrowing with a co-applicant
Fixed APRs
8.99% to 29.49%*
Loan amount
$5,000 to $100,000
Minimum credit score
680
Why we picked it
SoFi has the highest credit score requirement on our list — however, it allows co-borrowers, so you can better your chances of qualifying for a loan by adding a co-applicant to your application.
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The higher your co-applicant’s credit scores, the lower your quoted interest rate will be. (According to SoFi’s 2023 annual report filing, the weighted average FICO score for originated personal loans was 745 in 2023 — a score in the “very good” range.)
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A co-borrower could also help you qualify for a larger loan amount. It offers loans up to $100,000, and you can have up to seven years to repay your loan — a longer term option than most lenders offer. And, it doesn’t charge required origination fees.
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Recruiting a co-applicant would also help you access SoFi’s exclusive member benefits, such as unemployment protection — or the ability to pause your loan repayment if you were to lose your job involuntarily. This lender is regularly ranked among the best personal loans.
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On the downside, SoFi charges an optional 7% origination fee to access its basem*nt APRs. You could skip the fee if you’re willing to accept a higher fixed rate. Also note that SoFi personal loans are only available in 29 states and the District of Columbia.
Pros
- No origination fees
- High loan maximum
- Six loan term options (2 to 7 years)
- Same-day loan funding possible
- Accepts co-applicants
- High customer satisfaction ratings, according to J.D. Power
- Direct creditor repayment with rate discount
- No late fees
Cons
- Higher credit score requirement
- High loan minimum
- High maximum APR
- Lowest rates require a SoFi checking or savings account — and an origination fee
- Loans not available in 21 states
Who should consider it
Those with $50,000 or more of high-interest debt can benefit from SoFi’s high loan maximum, among other perks, though you might need a creditworthy co-applicant to gain approval.
*Rates as of May 8, 2024, assume autopay and direct deposit discounts
Prosper
Best peer-to-peer lender
Fixed APRs
8.99% to 35.99%*
Loan amount
$2,000 to $50,000
Minimum credit score
560
Why we picked it
As a peer-to-peer lender, Prosper connects prospective borrowers with individual investors. Based on their desired loan amounts and credit and risk profiles, investors decide whether to fund the borrowers’ loans, and borrowers can sometimes qualify for better terms than they’d get elsewhere.
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Through the platform, borrowers with scores as low as 560 can qualify for a loan — one of the lowest score requirements on our list. And it’s possible to apply with a creditworthy co-borrower who shares equal access to the funds and equal obligation for repayment.
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Despite its broader eligibility requirements, Prosper has some downsides. It charges origination fees (1% to 7.99%), and the maximum loan term is just five years. It also doesn’t offer personal loans in Iowa and West Virginia.
Pros
- Allows joint applicants
- Home equity options available
- Bad credit accepted (560)
- Low loan minimum
- Can change your due date once a year
Cons
- Doesn’t offer direct creditor repayment
- Charges origination fees
- High maximum APR
- 4 loan term options
- May take longer to process loans
- Not available in IA, WV
- No autopay discount
Who should consider it
Borrowers with fair credit who can wait out being matched with an investor may qualify for better terms than they’d get from other lenders.
*Rates as of May 8, 2024
LendingPoint
Best for competitive rates
Fixed APRs
7.99% to 35.99%*
Loan amount
$2,000 to $36,500
Minimum credit score
600
Why we picked it
LendingPoint offers loan options with loan terms from two to six years, and some borrowers can qualify for lower-than-average rates. The lower rate could help you save money over the life of your loan and, when used for consolidation, get out of debt faster. You can borrow as little as $2,000 and receive the loan funds as soon as the next day.
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Related >> Best online loans
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However, LendingPoint charges origination fees up to 10% and isn’t available in Nevada or West Virginia. You must have a minimum income of $35,000 or more, and you must qualify for a loan on your own; since LendingPoint doesn’t allow joint applicants or cosigned loans, you’re unlikely to qualify for a low rate if your credit scores are close to the lender’s minimum of 600
Pros
- Low loan minimum
- 5 repayment term options
- Next-day disbursem*nt is possible
- Possible to earn a lower fixed APR after six months of on-time payments
Cons
- Low loan maximum
- Origination fees up to 10%
- High maximum APR
- Higher income requirement than some competitors
- Not available in NV or WV
- Potentially high origination fee
- No joint or cosigned loans
Who should consider it
Those looking for competitive rates and need the loan quickly may benefit from LendingPoint’s debt consolidation loans.
*Rates as of May 8, 2024, assume autopay discount
Discover
Best for repayment flexibility
Fixed APRs
7.99% to 24.99%*
Loan amount
$2,500 to $40,000
Minimum credit score
660
Why we picked it
If you’ve had bad credit in the past, perhaps because of an involuntary job loss or other factors outside your control, you might prioritize online lender Discover for its repayment flexibility. It may allow you to temporarily lower your monthly dues, extend your loan term or get your account current relatively quickly (with three on-time payments) if you encounter a hardship during repayment of its debt consolidation loan.
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Also, Discover offers loan terms as long as seven years — one of the longest loan term options on our list. A longer term could mean more affordable monthly payments (at the cost of higher overall interest). This lender offers among the best installment loans.
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The catch is that Discover requires credit scores of 660 or better (and an annual household income of $25,000), and it doesn’t allow cosigned applications or co-borrowers. So it’s unlikely to be an option if you still have truly bad credit. That said, if you can pause your consolidation to first improve your credit scores, it could become an option down the road.
Pros
- Low loan minimum
- Potentially lower APR
- Loan disbursem*nt possible one day after approval
- Possible to disburse funds directly to your creditors
- 5 loan term options
- Hardship relief options during repayment
- No origination or other upfront fees
- High customer satisfaction ratings, according to J.D. Power
Cons
- Lower loan maximum than some competitors
- Cosigners and co-borrowers not accepted
- High credit score requirement
- No autopay discount
Who should consider it
Borrowers with fair to good credit can take advantage of Discover’s repayment flexibility and longer loan term options.
*Rates as of May 8, 2024
Achieve
Best for extra discounts
Fixed APRs
8.99% to 35.99%*
Loan amount
$5,000 to $50,000
Minimum credit score
620
Why we picked it
Achieve, formerly known as FreedomPlus, offers unusual discount programs that could help you save money. For example, you may qualify for a discount if you provide proof of retirement funds, such as your 401(k) or individual retirement account (IRA) balances. Or you can qualify for a discount if you opt for direct creditor payments, where the lender pays off your credit card or debt balances rather than issuing the funds to your bank account.
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If you can’t meet Achieve’s minimum credit score requirements, it’s possible to qualify with a co-borrower.
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However, Achieve charges origination fees (1.99% to 6.99%), and its loan minimum is $5,000 — higher than most.
Pros
- Discount programs available
- Accepts co-applicants
- Higher loan maximum
- Direct pay to creditors offered, may include rate discount
Cons
- Charges origination fees
- High loan minimum
- High maximum APR
- 4 loan term options
- Not available nationwide
Who should consider it
Those opting for direct creditor payments or who can provide proof of their retirement balance can qualify for valuable discounts.
*Rates as of May 8, 2024, may assume autopay discount
Upstart
Best for limited credit history
Fixed APRs
7.80% to 35.99%*
Loan amount
$1,000 to $50,000
Minimum credit score
300 or none
Why we picked it
Although some lenders cater to those with poor credit, it can be even more challenging to qualify for a loan if you don’t have any credit history. But through Upstart, you can qualify for a loan even if you have scores as low as 300 or no established credit history at all.
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Related >> Best bad credit loans
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You may pay for this access, however. Upstart charges credit card-like APRs to borrowers with bad or thin credit, plus origination fees as high as 12% of the loan amount.
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Also, loan term options are limited to three or five years. If you have a limited credit history, Upgrade requires a college degree to approve your application.
Pros
- No credit history required
- Disbursem*nt possible within one day of approval
- Low loan minimum
- Clear eligibility criteria
Cons
- High maximum APR
- 2 loan term options
- Potentially high origination fee (0% to 12%)
- College degree may be required
- Doesn’t allow cosigners or co-borrowers
Who should consider it
Borrowers with no or limited credit history may qualify for up to $50,000 through Upgrade.
*Rates as of May 8, 2024, assume autopay discount
Avant
Best for short loan terms
Fixed APRs
9.95% to 35.99%*
Loan amount
$2,000 to $35,000
Minimum credit score
580
Why we picked it
A long loan term can be appealing because of the smaller payment, but it can cost you more in interest over time. If you’re hoping to save as much money as possible, the shorter loan terms available through Avant could be a good option; it has terms from one to five years.
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Avant also has a competitively low credit score minimum, and it will disburse loan funds as soon as the next business day. It’s also among the best personal loans for veterans.
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On the downside, Avant charges a high administration (or origination) fee of up to 9.99%, and it doesn’t issue loans to residents of Hawaii, Iowa, Maine, Massachusetts, New York or West Virginia. To make matters worse, the Federal Trade Commission accused Avant of mistreating customer accounts in 2019, and the lender forked over $3.7 million in penalties in 2022.
Pros
- Low credit minimum
- Low loan minimum
- Quick loan disbursem*nt
- 5 loan term options
Cons
- High administration fee
- Low loan maximum
- High maximum APR
- Not available in 6 states
- No autopay discount
- No direct creditor repayment
Who should consider it
Those looking to maximize the savings of debt consolidation with a shorter loan term may find Avant appealing.
*Rates as of May 8, 2024
Happy Money
Best for low APR ceiling
Fixed APRs
11.72% to 17.99%*
Loan amount
$5,000 to $40,000
Minimum credit score
640
Why we picked it
Happy Money partners with credit unions, so it’s likely to offer lower rates with less stringent personal loan requirements than other lenders. And Happy Money will pay off your creditors directly, streamlining the debt consolidation process.
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If you can improve your credit scores to reach this lender’s minimum requirement, they could increase further after borrowing. Happy Money claims that customers who used their debt consolidation loan to pay off $5,000 or more in credit card balances experienced an average jump of 40 points in their scores within four months. (If you’re paying off more than $15,000 in debt, expect rates of 12.45% and up.)
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Happy Money caps its maximum APR at 17.99% — about half the maximum rate of other lenders. But Happy Money charges origination fees (1.5% to 5.5%), and its loans aren’t available in Massachusetts or Nevada.
Pros
- Low maximum APR
- Direct creditor payment option
- Partners with credit unions
- Doesn’t charge late fees
Cons
- Charges origination fees
- Slower processing and disbursem*nt times than some competitors
- High loan minimum
- 4 repayment term options
- Not available in MA and NV
- Doesn’t accept cosigners or co-borrowers
- No autopay discount
Who should consider it
Those with credit card balances above $5,000 may find Happy Money’s direct creditor payments to be an easy and quick way to manage their debt.
*Rates as of May 8, 2024
Our picks at a glance
| Lender | Rating | APR range* | Minimum credit score | Accepts co-applicants? |
|---|---|---|---|---|
LendingClub | 5 | 8.98% to 35.99% | 600 | Yes |
Upgrade | 5 | 8.49% to 35.99% | 580 | Yes |
SoFi | 4.7 | 8.99% to 29.49% | 680 | Yes |
Prosper | 4.6 | 8.99% to 35.99% | 560 | Yes |
LendingPoint | 4.5 | 7.99% to 35.99% | 600 | No |
Discover | 4.3 | 7.99% to 24.99% | 660 | No |
Achieve | 4.2 | 8.99% to 35.99% | 620 | Yes |
Upstart | 4.2 | 7.80% to 35.99% | 300 | No |
Avant | 4.1 | 9.95% to 35.99% | 580 | No |
Happy Money | 4 | 11.72% to 17.99% | 640 | No |
*Rates as of May 8, 2024, may include discounts
How to shop for debt consolidation loans
When shopping for a loan, consider the following factors to select the best debt consolidation loan for bad credit:
- Annual percentage rate (APR): Your APR measures how much you’ll pay in interest and fees over one year. Rates can vary significantly between lenders, and the rate has a substantial impact on your overall repayment cost. Comparing APRs (as opposed to simple interest rates) will give you a more complete picture of cost.
- Term: Loan terms typically range from two to five years, but some lenders offer shorter or longer terms. A longer loan term will give you a smaller monthly payment, but you’ll pay more in overall interest.
- Fees: Common debt consolidation loan fees include origination and late payment fees. These fees can increase your total cost.
Some predatory lenders offer debt consolidation options but charge prohibitively high rates and fees. Predatory lending is sometimes defined as consumer loans with rates above 36% — experts consider rates beyond that level to be unaffordable. To avoid predatory lenders, shop around and consider loan options from various types of lenders — including credit unions, banks and online companies — to find the best terms.
Related >> Benefits of personal loans
How to qualify for a debt consolidation loan with bad credit
Most personal loans, including the best debt consolidation loans, require fair to excellent credit. However, it’s possible to qualify for a loan with poor credit by following these tips:
- Add a cosigner or co-borrower. Adding a spouse, parent, relative or friend with good credit to your application can improve your chances of qualifying for a debt consolidation loan — or a lower APR.
- Opt for a secured loan. A secured debt consolidation loan requires some form of property as collateral, such as your car or savings account. Because the loan is backed by collateral, lenders are willing to take on the risk of lending to borrowers with less-than-stellar credit.
- Apply for a smaller loan. Based on your income and current debt, you may not qualify for the full loan amount you request. However, you may qualify for a smaller loan amount. Some lenders offer loans for $1,000 to $2,000 or less.
Related >> How to get a personal loan with bad credit
5 alternatives to debt consolidation loans
1. Budget and strategize
Good for: Consumers with a smaller amount of debt — and patience
If your outstanding balance is relatively low, such as $5,000 or less, you may be able to handle your debt on your own by creating a budget, trimming your spending and following a debt repayment strategy like the debt avalanche method. It’s an “avalanche” because you make extra payments toward the debt with the highest interest rate first, which helps you pay off your debt faster and save more money.
Next step: Set up your budget
2. Debt management plan or credit counseling
Good for: Borrowers that need help managing their debt
By working with a nonprofit credit counselor, you may be eligible for a debt management plan (DMP). Under a DMP, you make one monthly payment to the agency, which then pays your creditors on your behalf. The agency may be able to negotiate lower fees and payments, so you could save money. Under a DMP, you’re typically out of debt in three to five years.
Next step: Find an approved credit counseling agency (via the Department of Justice)
3. 0% balance transfer
Good for: Consumers with fair to excellent credit
A credit card balance transfer may be a better option than a debt consolidation loan. You could qualify for a card that offers 0% APR for a specific period, such as 12 to 21 months. When you transfer the balance to the new card, you could have a year or more to pay down the balance without interest. Just remember to subtract the average 3% to 5% balance transfer fee from your potential savings. However, most balance transfer cards require at least fair credit scores.
Next step: Consider the pros and cons of balance transfers
4. Home equity loans or lines of credit
Good for: Homeowners looking for low-interest debt consolidation loans
If you own a home and want the lowest rates possible, a home equity loan or home equity line of credit (HELOC) could be an option. By tapping into your home equity, you can borrow money at lower rates than with unsecured personal loans. However, your home serves as collateral, so it could be risky if the payment stretches your budget — if you default on the loan, you risk foreclosure.
Next step: Consider ways to tap your home equity
5. Bankruptcy
Good for: Borrowers who have accrued a truly insurmountable amount of debt
If your debt has grown too large to repay due to medical bills or other expenses, bankruptcy could be the best path forward. It can end the hassle of collection calls and wage garnishment, and you can start rebuilding your finances and your credit. However, bankruptcy can be expensive and have long-lasting consequences (affecting your credit for seven to 10 years), so explore other options first.
Next step: Talk to an accredited credit counselor (via the DOJ, above)
How to get a debt consolidation loan with bad credit
- Find a co-applicant. If you have truly bad credit, consider asking a family member or friend to cosign your loan or act as a joint applicant (co-borrower). It could improve your odds of getting a loan and securing a better rate. Just keep in mind that cosigners and co-borrowers are legally responsible for repayment (so they’re putting their credit on the line, too), but only co-borrowers share access to the loan funds (unless you opt for a direct creditor payment).
- Determine your borrowing amount. Consider how much money you need to pay off your existing balances. Debt consolidation loans can typically be used to repay credit card balances, medical bills and existing personal loans. However, most lenders prohibit using debt consolidation loans to repay student loans or refinance business debt, so don’t include those balances in your estimate.
- Shop around. Rates, terms and eligibility requirements vary by lender, so request quotes from several lenders. Most companies offer personal loan pre-qualification that allows you to check your eligibility and view loan options without impacting your credit.
- Apply. Once you’ve found the best loan for your situation, fill out the application online. The lender typically asks for your contact information, income, employment information and identification. The lender also asks for your consent for a hard credit inquiry, which can drop your credit scores by up to five points, according to FICO. Once you formally apply for a personal loan, you’ll typically receive a same-day decision, but timelines vary by lender.
- Select a disbursem*nt method. If you’re approved for a debt consolidation loan, you can opt to have the loan funds disbursed to your bank account or directly to your creditors (if your lender offers that option). Sign the loan agreement and designate how you want loan funds to be disbursed. In most cases, loan funds are sent in one to five days. Then, ready for repayment.
Methodology
What are the best debt consolidation loans for bad credit? It depends on who you ask. But our editors and research analysts took opinion out of the equation, instead objectively comparing 27 lenders across 26 loan features. Lenders earned higher out-of-5 star ratings for their performance in the following four categories:
Loan cost (30%)
We considered six criteria in this key category, including minimum and maximum APRs, discounts for enrolling in autopay and direct creditor payoffs, plus origination fees.
Loan details (30%)
Since no two borrowers are seeking the exact same debt consolidation loan, we rewarded lenders here for their flexibility in the matters of:
- Minimum and maximum loan amounts
- Shortest and longest repayment terms
- Time to fund loans
- Option to repay creditors directly
Eligibility (25%)
Borrowers with bad credit face high hurdles to getting a debt consolidation loan, so we gave points to lenders with low minimum credit score and income requirements and offer the option to add a cosigner or co-borrower, among other factors.
Repayment experience (15%)
If you have bad credit, chances are you’ve dealt with a bad lender or two. Here, we hope to help you avoid repeating that experience. Our analysis looked fondly upon lenders with hardship programs and credit-building tools, plus accessible and effective customer service. We relied, in part, on independent organizations like the Better Business Bureau and the Consumer Financial Protection Bureau to inform our scoring.
What didn’t make the cut
Seventeen financial institutions under consideration didn’t crack our list of the best debt consolidation loans for bad credit. Here are examples of well-known lenders that fell short:
- Axos Bank and Universal Credit have high starting APRs.
- Best Egg and One Main Financial are among lenders with high origination fees.
- BHG Money has a relatively high minimum loan amount.
- Laurel Road and Rocket Loans are among lenders with too few repayment term options.
- LightSteam doesn’t offer pre-qualification.
- U.S. Bank’s rating was dinged by its minimum credit score requirement.
Frequently asked questions (FAQs)
Fees for origination and late payments are the most common surcharges of debt consolidation loans for bad credit. Origination fees are charged as a percentage of the loan amount — for example, a lender may charge 9% of the loan amount — and it’s deducted from the loan at the time of disbursem*nt. Late fees are only incurred if you miss a payment due date, but can be as much as $40 per missed payment.
Recruit a co-applicant, apply for a secured personal loan or request a smaller loan amount.
Although rates can be as high as 35.99%, the average APR for the best lenders of debt consolidation loans for bad credit (listed above) was 20.75%.
No, some lenders have unsecured options specifically for those with poor credit, and other lenders offer cosigned or joint loans.
It’s possible to qualify for a debt consolidation loan without a cosigner if you apply for a secured loan or work with an unsecured lender that caters to borrowers with poor credit. However, keep in mind that debt consolidation loans designed for those with poor credit tend to have higher APRs.
