Best Debt Consolidation Loans for Bad Credit

Debt consolidation loans can help you save money on interest and lower monthly payments. However, maximizing savings requires finding the most competitive rates and terms that meet your needs. The best debt consolidation loans offer accessible credit score requirements, low rates, and flexible repayment terms. Top lenders also offer direct payments to lenders, rate discounts, and other features.

Best Overall: Marcus By Goldman Sachs

• Minimum Credit Score: 660
• APR: 6.99% to 24.99%
• Loan Range: $3,500 to $40,000
• Term Length: 3 to 6 years

Why We Like It

• No origination or prepayment fees
• Discounts for autopay
• Can get approved in 1 to 4 days
• Customized payment terms and options

Marcus is the consumer banking arm of Goldman Sachs that offers personal loans nationwide. Loans are available from $3,500 to $40,000, and borrowers can use funds to consolidate existing debts. Repayment terms are flexible, interest rates are competitive, and the lender offers direct payment to third-party creditors.

Like many top lenders, Marcus offers a prequalification process that lets you see what rate you’re likely to qualify for. This only requires a soft credit pull and does not impact your credit score. Here’s what you need to qualify for a debt consolidation loan from Marcus:

• Live in a U.S. state or territory
• Provide proof of income (employment, self-employment, or other sources of income)
• Social Security number, Individual Tax ID number, a photo ID
• No co-signers or co-applicants

Best for Credit Card Debt: Credible

• Minimum Credit Score: 600
• APR: 5.73% to 35.99%
• Loan Range: $600 to $100,000
• Term Length: 2 to 7 years

Why We Like It

• Free, no-obligation loan matching service allows borrowers to get connected with lenders through the marketplace
• $200 Best Rate Guarantee if you find a better rate elsewhere
• Get multiple loan offers at once
• No fees, no prepayment penalty

Credible gives users a tool to apply for debt consolidation loans through multiple lenders simultaneously—all through the platform’s website. Prospective borrowers get matched with multiple loan options without a hard credit pull, so they can choose the best option without hurting their credit scores. Not only does the platform make it easy to compare loan offers, but it also specializes in credit card debt consolidation.

To see what rate you’ll qualify for, enter how much you need to borrow and click on “Find My Rate” on the credit card consolidation loans landing page. Here’s some of the information you’ll need to provide to qualify and apply:

• Highest level of education completed
• Employment situation
• Income relative to existing debts
• Valid Social Security number

Best for Bad Credit: FreedomPlus

• Minimum Credit Score: 620
• APR: 7.99% to 29.99%
• Loan Range: $5,000 to $50,000
• Term Length: 2 to 5 years

Why We Like It

• Can have payment made directly to existing creditors
• Get pre-qualified with a soft credit check
• Can have a co-signer or co-applicant
• Can get funded in as soon as 1 to 3 days

FreedomPlus is an online lender that offers more competitive interest rates to borrowers who use loans for debt consolidation. The lender imposes a low credit score requirement (just 620) but also offers lower rates to borrowers who apply with a co-borrower, use at least 85% of the loan proceeds to pay off existing debt, or demonstrate sufficient retirement savings. Keep in mind, however, that loans are not currently available in CO, CT, HI, KS, ME, ND, VT, WV, WI, and WY.

Apply for a debt consolidation loan through FreedomPlus by navigating to “Get My Loan” from the homepage. Then, enter the amount you need to borrow and follow the online prompts. Credit decisions are available within two to three hours, with same-day approval and funds sent in 24 to 72 hours.

Prospective borrowers must meet the following qualification requirements:

• Proof of income (W-2 or pay stub)
• Proof of address
• Social Security number
• Live in a state where FreedomPlus offers loans

Best for Fast Funding: Monevo

• Minimum Credit Score: 580
• APR: 1.99% to 35.99%
• Loan Range: $500 to $100,000
• Term Length: 6 to 144 months

Why We Like It

• Multiple personal loan offers with one application
• Get pre-qualified with just a soft credit pull
• Borrow up to $100k
• Funding may be available as soon as the next business day

Monevo is a fintech company that connects borrowers with lenders through its online platform. The website makes it easy to enter your borrowing needs and estimated credit score and get multiple loan options from several lenders. Checking your rate does not impact your credit score, so you can see if debt consolidation has the potential to save you money. Plus, you’ll get loan options almost immediately, and many lenders offer next-day funding.

Because Monevo works with an extensive network of lenders, qualified borrowers can choose from competitive rates and flexible loan amounts and repayment terms. That said, borrower qualifications vary by the individual lender. In general, you’ll need to meet the following requirements:

• Verifiable income
• Social Security number
• Good debt-to-income ratio
• A co-signer or co-applicant, where necessary

Best for Discounts: Upgrade

• Minimum Credit Score: 560
• APR: 7.46% to 35.97%
• Loan Range: $1,000 to $50,000
• Term Length: 24 to 84 months

Why We Like It

• Multiple rate discounts, including autopay discount (reportedly 0.5%)
• Direct payments to creditors
• Extra-long repayment terms for some loan uses
• Joint loans available

Upgrade is a personal loan company that offers debt consolidation loans for borrowers with a credit score of 560 or higher. Annual percentage rates start at 7.46%, and the company offers 24- to 84-month terms. In addition, Upgrade provides direct payments to creditors and discounts for borrowers who use autopay.

Borrowers can apply for a loan on Upgrade’s website and receive a response within minutes. The company can fund the loan within one to two business days if approved. To qualify, borrowers must have a steady income and meet the following requirements:

• Be at least 18 years old
• Have a valid Social Security number
• Live in a state where Upgrade offers loans
• Have a verifiable bank account
• 75% maximum debt-to-income ratio

How Debt Consolidation Loans Work

Borrowers who want to streamline their debt service can apply for a personal loan large enough to pay off their other outstanding loan balances. Once the loan funds are disbursed, the borrower can use the cash to pay off their other debts. Some lenders offer direct payment to third-party creditors, further simplifying the consolidation process. After the loans are paid off, the borrower only has to make a single payment each month on the debt consolidation loan.

Tips for Choosing the Best Debt Consolidation Loan

There are a few things to keep in mind when you’re shopping for a debt consolidation loan.

• Make sure you understand the terms and conditions before agreeing to a loan
• Choose a loan with a lower interest rate than the interest rates on your individual debts
• Calculate the monthly payment you can afford before applying for a loan
• Shop around for the best deal based on your borrowing needs
• Read reviews of different debt consolidation loans to compare lender reputations

How To Apply For a Debt Consolidation Loan

If you decide that a debt consolidation loan is right for you, the next step is to apply for the loan. You can do this by visiting the website of a lender or by contacting a lender directly. To apply for a loan, provide basic information about yourself, including your name, address, and Social Security number. You’ll also need to provide information about your debts, including the outstanding balances and interest rates.

Many of the best lenders offer a prequalification process that does not require a hard credit inquiry. Once you apply for the loan, the lender reviews your application and decides whether to approve you, for how much, and at what interest rate. If you’re approved, the lender sends you a loan offer with the terms and conditions of the loan. Always read over the terms and conditions carefully before accepting a loan.

What is a debt consolidation loan?

A debt consolidation loan is a new loan used to pay off multiple debts. These loans combine all of a borrower’s outstanding debts into one single loan with one monthly payment. For that reason, debt consolidation loans are a great way for qualified borrowers to pay off high-interest credit cards, store financing, and other types of debt.

About The Author

Kiah Treece

Licensed Attorney and Small Business Owner

Kiah Treece is a small business owner and former attorney with extensive experience in real estate investing and finance. She's passionate about helping readers navigate personal finance topics like banking, credit cards, personal loans, and insurance. Kiah has been featured in industry-leading publications, including Forbes Advisor, Investopedia, and The Spruce.

Articles by Kiah Treece

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