Best Bad Credit Debt Consolidation Loans in March 2024

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ByChristopher Boston
Edited byLukas Velunta
ByChristopher Boston
Edited byLukas Velunta

Updated: March 22, 2024

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Handling multiple debts can be tricky. That's where debt consolidation comes in. Instead of many bills, you focus on one loan. This can make things simpler and might even save you money if the new loan has a better rate.

Looking into debt consolidation, especially with bad credit, can feel tough. But below, we've listed some top loans made just for this purpose. We've also added some helpful tips and info to help you decide if debt consolidation is the right step for you.

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Best Debt Consolidation Lenders of 2024

If you have bad credit, debt consolidation loans can be daunting, but some lenders have truly shined. They've made a mark with their competitive interest rates, flexible repayment terms and excellent customer service. Here's our pick of the best lenders to help those with bad credit streamline their finances and potentially reduce their debt burden.


    Best Overall Bad Credit: Upgrade

  • Upgrade
    • 8.49% to 35.99%APR Range
    • UndisclosedMinimum Credit Score
    • $1,000 to $50,000Loan Amount Range
    • 24 to 84 monthsRepayment Terms
    • Within a dayTime to Receive Funds

    Upgrade is one of MoneyGeek’s top picks for low-income borrowers seeking a personal loan. This lender does not have minimum income requirements and accepts applicants with a FICO score of at least 560. They offer loans of up to $50,000, and their repayment terms are flexible at 60 months maximum.

    Upgrade doesn’t charge penalties for individuals who pay off their loans early. They also provide a discount if you sign up for autopay.

    However, because Upgrade caters to borrowers with low and fair credit, their interest rates are relatively high. Their loans also carry an origination fee and late payment penalty. Although they only conduct a soft inquiry during pre-qualification, they don’t allow co-signers. Nonetheless, this lender accepts joint applications, giving borrowers with poor credit a better chance of loan approval.

    Pros

    • A+ BBB rating
    • 1% discount for autopay
    • Doesn’t charge prepayment fee
    • Conducts soft credit inquiries
    • Joint loans available

    Cons

    • $10 late fee
    • Has origination fee
    • Doesn’t allow co-signers
    • Won’t accept people with new or no credit
    • Restrictions on fund usage
    Upgrade

    • Runner-up: Upstart

  • Upstart
    • 6.4% to 35.99%APR Range
    • 300Minimum Credit Score
    • $1,000 to $50,000Loan Amount Range
    • 3 or 5 yearsRepayment Terms
    • 1 business dayTime to Receive Funds

    Upgrade is the second-best option for those with bad credit. The company offers loans in amounts as low as $1,000 and as high as $50,000. If qualified, you may get an interest rate as low as 5.94%. Getting funds also does not take long, because Upgrade releases money on the same business day that your loan application is approved. For convenience, the company accepts online applications. Borrowers can access their loan information through its mobile app.

    However, Upgrade may not be a great option for some people. For example, the company does not allow borrowers to use the money to fund their post-secondary education. Upgrade also has a 2.9%–8% origination fee. Finally, if you have a credit score below 560, an Upgrade personal loan is not for you.

    Pros

    • 1% auto payment discount
    • No prepayment penalty
    • No minimum gross income requirement
    • Same-day funding

    Cons

    • 2.9%–8% origination fee
    • Charges late fees ($10)
    • Does not accept those with new or no credit
    • Cannot be used for post-secondary education
    Upstart

    • Best for Low Rates: Avant

  • Avant
    • 9.95% to 35.95%APR Range
    • 600Minimum Credit Score
    • $2,000 to $35,000Loan Amount Range
    • 24 to 60 monthsRepayment Terms
    • Next DayTime to Receive Funds

    Avant can be a good option for borrowers who don't have excellent credit standing because they only have a minimum credit score requirement of 600. They also conduct soft credit inquiries when you check for possible loan options, which doesn't impact your credit score. However, it does have a pay-off — its interest rates. Even at the low end of the spectrum, you can expect an APR of 9.95% at the very least.

    Avant offers several advantages to borrowers who prioritize efficiency and convenience. You can complete the entire application process online — from checking whether you pre-qualify to closing. You can also manage your loan using their mobile app, which works best if you're always on the go.

    Pros

    • Conducts soft inquiry when you check your loan options
    • The minimum credit score is 600
    • Releases funds as soon as the next business day
    • Does not charge a penalty for prepayment
    • Has a mobile app

    Cons

    • You can only borrow up to $35,000
    • Does not offer a discount for automatic payments
    • The administration fee can be up to 4.75%
    • Currently does not accept applications from Hawaii, Iowa, New York, Vermont and West Virginia
    Avant

    • Best for Limited Credit History: LendingPoint

  • LendingPoint
    • 7.99% to 35.99%APR Range
    • UndisclosedMinimum Credit Score
    • $2,000 to $36,500Loan Amount Range
    • 24 to 72 monthsRepayment Terms
    • Next business dayTime to Receive Funds

    LendingPoint, a financial technology platform founded in 2014, reviews loan applications and approves loans using proprietary algorithms and artificial intelligence. You can apply for loans ranging from $2,000 to $36,500 if you have a minimum credit score of 590 and an annual salary of at least $20,000.

    Apart from its A+ rating with the Better Business Bureau and low eligibility criteria, the company's noteworthy qualities include the absence of a prepayment penalty and speedy loan processing.

    Additionally, the company does not place restrictions on loan usage. You are good to go as long as the intended use is legitimate. However, LendingPoint may not be for you if you wish to apply for a joint loan or want a co-signer. Additionally, West Virginia and Nevada residents are not eligible to apply.

    Pros

    • No restrictions on the usage of funds
    • Next-day funding
    • Moderate credit score requirement
    • Soft credit inquiry
    • No prepayment penalty
    • Low minimum income requirement

    Cons

    • Charges origination fee of up to 6%
    • Higher than average APR
    • Maximum loan amount of $36,500
    • No autopay discount
    • Charges $30 late fees
    • No co-signed or joint loans
    LendingPoint

Benefits of Debt Consolidation Personal Loans for Bad Credit

Managing multiple debts can be a challenge, especially if you're looking for loans to consolidate debt for bad credit. Debt consolidation personal loans for bad credit offer a way to simplify your financial life, bringing several advantages:

  • Single Monthly Payment: Instead of juggling payments for three credit cards due on different dates, imagine the ease of just one monthly payment due every month. This minimizes the chances of missing a due date, especially when seeking debt consolidation loans for bad credit online decision.
  • Potential for Lower Interest Rates: If you've been dealing with credit cards with rates like 20% and 23%, securing a best debt consolidation loan for bad credit with a rate of 15% can offer significant savings over time.
  • Improved Credit Score Over Time: If past multiple debts led to occasional missed payments, a single consistent payment can boost your credit score, making options like online debt consolidation loans for bad credit more accessible in the future.
  • Simplified Financial Management: Think of your finances as a dashboard. With one loan, it's less cluttered, giving you more time for things you enjoy.

Potential Risks of Debt Consolidation Personal Loans for Bad Credit

While debt consolidation loans for bad credit can be beneficial, they come with potential risks:

  • Possibility of Higher Interest Rates: With a tarnished credit history, you might face rates higher than someone with excellent credit. For instance, while they might get 10%, you could be offered rates of 20% or more.
  • Risk of Accumulating More Debt: After using a loan to pay off three credit cards, avoid racking up new balances on them. Otherwise, you'll have those card payments plus the loan payment, pushing you back to square one.
  • Losing Collateral on Secured Loans: Some loans, especially from certain direct lenders, require assets like your home as collateral. Defaulting could mean losing this asset.
  • Unexpected Fees: Always read the terms. For instance, a $10,000 loan might have a 3% origination fee, costing you $300 upfront.

Types of Debts for Bad Credit Debt Consolidation Loans

Managing various debts can be daunting, especially with bad credit. Debt consolidation combines these debts for simplicity. Here's a breakdown of common debts and considerations when thinking of using consolidation loans to deal with bad credit:

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Key Considerations When Opting for Bad Credit Debt Consolidation Loans

Navigating bad credit debt consolidation loans can be a daunting task, especially when faced with numerous options and varying terms. In this section, we'll delve into the essential factors you should consider, providing clarity and guidance as you explore your options.

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Step-by-Step: How To Choose the Best Debt Consolidation Loans for Bad Credit

Choosing the right debt consolidation loan for bad credit is pivotal for your financial well-being. With a plethora of lenders, terms and offers available, making an informed decision is key. Follow this systematic guide to pinpoint the ideal loan tailored to your needs:

1

Compare Interest Rates

Evaluate interest rates from various direct lenders for debt consolidation loans. If your credit cards charge rates like 23% and 19%, and you spot a consolidation loan at 15%, that's potential savings. Target a loan rate that's lower than your existing debts.

2

Examine Loan Term Durations

Loan durations differ among lenders. For a $10,000 loan at 15%, a 2-year term might mean around $480 monthly, while a 5-year term could be about $240. Opt for a term that aligns with your budget. Shorter durations might have steeper monthly payments but can expedite debt clearance.

3

Calculate Monthly Payment Amounts

Determine feasible monthly payments. If a loan suggests $300 monthly, but you can only spare $250, rethink your options. Ensure the monthly commitment won't strain your finances.

4

Research Lender Reputation and Customer Reviews

Reputation is telling. If "QuickLoans" offers a tempting rate but has numerous online complaints about hidden fees, that's a red flag.

5

Check Eligibility Requirements

Different lenders have unique criteria, like minimum credit scores. If a lender's threshold is 680 and you're at 670, which they may consider bad credit, enhance your score or explore your debt consolidation options with other lenders.

6

Look Out for Additional Fees and Charges

Scrutinize the details. A seemingly attractive rate might come with a 4% origination fee on a $10,000 loan, adding an immediate $400 to your debt.

7

Ask About Flexibility

Life's unpredictable. If unforeseen circumstances affect your payment ability, know if your lender offers grace periods or deferments without added costs.

8

Seek Expert Advice

Never underestimate professional guidance. If you're torn between two debt consolidation loan offers, a financial expert can highlight aspects you might've overlooked, potentially saving you money and hassle.

Exploring Alternatives to Debt Consolidation Personal Loans for Bad Credit

Debt consolidation personal loans for bad credit are a sought-after choice for many aiming to streamline their debts. However, they're not the sole avenue. Depending on your financial landscape, objectives and inclinations, other alternatives might resonate more. Here's a comprehensive look at various options to aid your decision-making:

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FAQ About Debt Consolidation Loans for Bad Credit

If you're considering debt consolidation loans for bad credit, you likely have questions. In this section, we answer the most common queries to help you understand your options and make confident decisions.

Initially, applying for a debt consolidation loan for bad credit might cause a minor drop in your credit score due to the credit inquiry. However, over time, if managed well, such loans can enhance your credit by lowering your credit utilization and cementing a punctual payment history.

Securing a debt consolidation loan for bad credit hinges on factors like your credit score, income and the debt amount you aim to consolidate. Individuals with robust credit scores generally have higher approval odds and receive more favorable terms.

Debt consolidation can streamline financial management by merging multiple payments. If you obtain a rate lower than your existing debts, it can be cost-effective. However, scrutinizing the terms and ensuring consistent consolidated loan payments is crucial to avert added financial woes.

Absolutely. If you have bad credit, the core intent of a debt consolidation loan is to settle multiple debts, amalgamating them into one loan with a singular monthly payment.

Perks encompass potential lower interest rates, one consolidated payment, enhanced credit scores over time and streamlined financial oversight.

Some pitfalls might be higher rates for those with bad credit, the risk of deeper debt if undisciplined, potential collateral loss on secured loans and extra charges.

While numerous debts like credit card dues, medical expenses and other personal loans can be consolidated, some, such as federal student loans, might have benefits that could be lost when merged with a personal loan.

A debt consolidation loan for bad credit provides a sum to settle multiple debts, repaid in fixed installments over a designated term. In contrast, a balance transfer card lets you shift debts to a new card, often with a promotional low or 0% interest for a set duration.

Methodology for Selecting the Best Debt Consolidation Loans for Bad Credit

At MoneyGeek, we meticulously examined over 30 personal loan lenders, leveraging 35+ distinct data points spanning six pivotal categories: loan affordability, accessibility, consumer friendliness, customer service, flexibility and lender transparency.

For each ranking criteria, we zeroed in on key data points paramount for selecting a debt consolidation personal loan for bad credit. These encompassed APR ranges, loan amounts, minimum credit scores, minimum income thresholds, application fees and disbursement durations.

We prioritize you, our valued consumer. Hence, we also incorporated each lender's customer support quality, business ratings and supplementary features enhancing your borrowing journey — such as prequalification, diverse payment avenues and user-friendly mobile apps.

After rigorous evaluation, our selections are tailored with your welfare at the forefront. Our suggestions for and expert insights into debt consolidation loans for bad credit aim to empower you in making an informed lender choice, optimizing debt consolidation and fulfilling your financial aspirations.

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About Christopher Boston

Christopher Boston headshot

Christopher (Croix) Boston was the Head of Loans content at MoneyGeek, with over five years of experience researching higher education, mortgage and personal loans.

Boston has a bachelor's degree from the Seattle Pacific University. They pride themselves in using their skills and experience to create quality content that helps people save and spend efficiently.

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The content on this page is accurate as of the posting/last updated date; however, some of the rates mentioned may have changed. We recommend visiting the lender's website for the most up-to-date information available.

Editorial Disclosure: Opinions, reviews, analyses and recommendations are the author’s alone and have not been reviewed, endorsed or approved by any bank, lender or other entity. Learn more about our editorial policies and expert editorial team.