Debt consolidation is the process of paying off your debts with a new loan, ideally with a lower interest rate than what you're currently paying. You can lower your monthly payments, reduce interest costs, avoid compound interest, and improve your credit score by consolidating or refinancing debt. Plus, you can simplify your monthly budget by replacing several monthly payments with one.
Personal loans are often used to consolidate debt since they have lower average annual percentage rates (APRs) compared to credit cards, according to the Federal Reserve — 12.49% for two-year personal loans compared to 21.59% for credit cards.
Here’s what to know about getting a debt consolidation loan, including where to find one, how to qualify, and alternatives.
Advertiser DisclosureFox Money rating
Fixed (APR)
7.80% - 35.99%
Loan Amounts
$1000 to $50000
Min. Credit Score
Overview
Upstart has one of the lowest available APRs of Credible partner lenders and of all non-partners we reviewed, making it a good choice for well-qualified applicants. However, it's also is one of few lenders that doesn't have a minimum credit score requirement (if you apply on the lender's website), which makes it an option if you have bad credit or no credit history. Upstart may charge an origination fee as high as 12%, but good-credit borrowers may not be charged one at all.
Trustpilot gives Upstart 4.9 stars, which is the highest of all lenders we reviewed.
Loan amount
$1,000 to $50,000
Fees
Origination fee
Eligibility
Available nationwide
Min. income
Customer service
Phone, email
Soft credit check
Time to get funds
As soon as 1 to 3 business days
Loan uses
Pay off credit cards, consolidate debt, relocate, make a large purchase, and other purposes
Fox Money rating
Fixed (APR)
7.99% - 24.99%
Loan Amounts
$2500 to $40000
Min. Credit Score
Overview
Discover Personal Loans offers low APRs, repayment terms up to seven years, no origination fees, nationwide availability, and doesn't require your Social Security number to prequalify on its site. You'll need to have an annual income of at least $40,000, and a FICO score 660 or higher, to be eligible. If your credit score is fair or poor, you'll need to go elsewhere, as Discover doesn't allow cosigners.
Funds are available as soon as the next business day after loan approval.
Loan amount
$2,500 - $40,000
Repayment terms
3 - 7 years
Eligibility
Available in all 50 states
Min. income
Customer service
Soft credit check
Time to get funds
Funds can be sent as soon as the next business day after acceptance
Loan uses
Auto repair, credit card refinancing, debt consolidation, home remodel or repair, major purchase, medical expenses, taxes, vacation, and wedding
Fox Money rating
Fixed (APR)
8.98% - 35.99%
Loan Amounts
$1000 to $40000
Min. Credit Score
Overview
LendingClub is a solid lender for good credit borrowers and some fair credit borrowers that apply directly on its website. It's easy to prequalify with LendingClub, especially if you're uncomfortable providing your Social Security number, as the company doesn't require it at the prequalification stage. (You will need to provide it if you move forward with a full application.)
While prequalification is not a guarantee that you'll be approved for a loan, LendingClub does a better job than most other Credible partner lenders at approving applicants that have successfully prequalified. In other words, you're less likely to have your application declined once you apply (if you've already prequalified). LendingClub may charge an origination fee between 3% and 8%.
Loan amount
$1,000 to $40,000
Fees
Origination fee
Eligibility
Available in all 50 states
Min. income
Customer service
Phone, email
Soft credit check
Time to get funds
Within 3 days
Loan uses
Debt consolidation, paying off credit cards
Fox Money rating
Fixed (APR)
8.99% - 29.99%1
Loan Amounts
$5000 to $100000
Min. Credit Score
Does not disclose
Overview
SoFi stands out for offering no-fee personal loans with competitive rates, high loan amounts, long loan terms, discounts for autopay and direct pay, and funding as soon as the same day. Plus, SoFi prioritizes convenience for existing and potential customers with features like live chat and an easy prequalification process that doesn't require your Social Security number.
The main catch is that you need to qualify for a loan with SoFi, which can be hard to do if you don't have good credit. You also won't be able to apply with a cosigner, since SoFi doesn't accept cosigners; nor does it offer secured personal loans.
Loan Amount
$5,000 to $100,000
Repayment terms
2 - 7 years
Fees
Option to pay an origination fee in exchange for a lower rate
Discounts
Autopay, direct pay
Eligibility
Available in all states
Min. income
Does not disclose
Customer service
Phone, email, live chat
Soft credit check
Time to get funds
Typically within a few days, given approval and bank account verification, but sometimes within the same day
Loan uses
Solely for personal, family, or household uses
Fox Money rating
Fixed (APR)
8.99% - 35.99%
Loan Amounts
$2000 to $50000
Min. Credit Score
Overview
Best Egg is a solid lender for a wide range of borrowers and, notably, scored second for personal loan satisfaction in J.D. Power's Consumer Lending Study. It offers competitive rates, reasonable loan terms and amounts, and personal loans for fair credit. You'll need a FICO score of at least 600 to qualify, but the lower your score, the higher your APR may be. The APR includes the interest rate and origination fees, which range from 0.99% to 9.99% with Best Egg.
Note that if you successfully prequalify with Best Egg, you may be more likely to be approved for the loan relative to other lenders you prequalify with. Based on Credible data, borrowers who chose to apply for a loan with Best Egg were more than twice as likely to be approved (relative to most other Credible partners).
Loan amount
$2,000 to $50,000
Fees
Origination fee, late fee, unsuccessful payment fee, check processing fee
Eligibility
Available in all states except DC, IA, VT, and WV
Min. income
Customer service
Phone, email
Soft credit check
Time to get funds
As soon as 1 to 3 business days after successful verification
Loan uses
Credit card refinancing, debt consolidation, home improvement, and other purposes
Fox Money rating
Fixed (APR)
9.99% - 35.99%
Loan Amounts
$1000 to $50000
Min. Credit Score
Overview
Upgrade has a suite of features that make it a very attractive lender: competitive interest rates, discounts for direct pay and autopay, as soon as same-day funding, up to seven-year repayment terms, and nationwide availability. Plus, loans are available to fair-credit borrowers, and you don't need to input your Social Security number to prequalify on the website. Upgrade even offers secured personal loans, which is not common among lenders.
However, Upgrade does charge an origination fee of 1.85% to 9.99%. You must have a FICO score of at least 600 and a minimum income of $25,000 annually to qualify.
Loan amount
$1,000 to $50,000 ($3,005 minimum in GA; $6,600 minimum in MA)
Repayment terms
2 to 7 years
Fees
Origination fee
Discounts
Autopay and direct pay
Eligibility
Available in all states
Min. income
Does not disclose
Customer service
Soft credit check
Time to get funds
1 business day
Loan uses
Credit card refinancing, debt consolidation, home improvement, major purchase, other
Fox Money rating
Fixed (APR)
11.69% - 35.99%
Loan Amounts
$1000 to $50000
Min. Credit Score
Overview
Universal Credit is one of a handful of lenders that offers personal loans for bad credit. If your FICO credit score is at least 560, you may be eligible for a Universal Credit personal loan. It offers loan amounts up to $50,000, repayment terms up to seven years, and discounts for direct pay and autopay. Funds are available as soon as the next business day after loan approval.
Note that rates and fees can be relatively high — you may pay an origination fee from 5.25% to 9.99%, and APRs start at 11.69%. If you get a loan with a high interest rate, consider refinancing your personal loan at a lower rate once you've improved your credit score.
Loan amount
$1,000 - $50,000
Repayment terms
3, 5, or 7 years
Fees
Origination fee
Discounts
Autopay and direct pay
Eligibility
A U.S. citizen or permanent resident; not available in DC, IA, SC, WV
Min. income
Customer service
Phone, email
Soft credit check
Time to get funds
As soon as 1 business day after acceptance
Loan uses
Debt consolidation, pay off credit cards, home improvements, unexpected expenses, home and auto repairs, weddings, and other major purchases
Fox Money rating
Fixed (APR)
11.72% - 17.99%
Loan Amounts
$5000 to $40000
Min. Credit Score
Overview
Happy Money has been in operation since 2009 (formerly known as Payoff). It's an option for fair-credit borrowers (plus those with better credit), and notably has a relatively low top-end APR. In other words, you could qualify for a lower rate with Happy Money with fair credit, relative to other lenders that offer fair-credit loans. The company does charge an origination fee on some loans, up to 5%, but that's not as high as some other lenders' origination fees.
You should be prepared to wait a few days to get your money, as funding can take three to five days once approved. And loans aren't available in Massachusetts or Nevada. Happy Money has an A+ rating with the BBB and is ideal for debt consolidation and credit card consolidation loans.
Loan amount
$3,000 to $40,000
Fees
Origination fee
Eligibility
Available in all states except MA, MS, NV, and OH
Min. income
Customer service
Phone, email, chat
Soft credit check
Time to get funds
As soon as 2 - 5 business days after verification
Loan uses
Debt consolidation and credit card consolidation only
Fox Business does not make or arrange loans.
The best debt consolidation loans offer low interest rates, a variety of repayment options, and low or no fees. Some lenders will even pay your creditors directly, which streamlines the debt payoff process. You can use these loans to pay off credit card debt, medical bills, or other financial obligations.
Best overall
SoFi
Fox Money rating
Est. APR
8.99 - 29.99%1
Loan Amount
$5000 to $100000
Min. Credit Score
Does not disclose
Pros and cons
No fees required
Large loan amounts available
Autopay and direct pay discounts
Same day funding
Long loan terms available
Good credit required
5,000 minimum loan amount
More details
Overview
SoFi stands out for offering no-fee personal loans with competitive rates, high loan amounts, long loan terms, discounts for autopay and direct pay, and funding as soon as the same day. Plus, SoFi prioritizes convenience for existing and potential customers with features like live chat and an easy prequalification process that doesn't require your Social Security number.
The main catch is that you need to qualify for a loan with SoFi, which can be hard to do if you don't have good credit. You also won't be able to apply with a cosigner, since SoFi doesn't accept cosigners; nor does it offer secured personal loans.
Loan Amount
$5,000 to $100,000
Repayment terms
2 - 7 years
Fees
Option to pay an origination fee in exchange for a lower rate
Discounts
Autopay, direct pay
Eligibility
Available in all states
Min. income
Does not disclose
Customer service
Phone, email, live chat
Soft credit check
Time to get funds
Typically within a few days, given approval and bank account verification, but sometimes within the same day
Loan uses
Solely for personal, family, or household uses
Best for fair credit
Upgrade
Fox Money rating
Est. APR
9.99 - 35.99%
Loan Amount
$1000 to $50000
Min. Credit Score
600
Pros and cons
Fair credit borrowers eligible
Autopay and direct pay discounts
Can fund in as little as 1 business day
Mobile app
Secured loans available
High maximum origination fee
Cosigners not accepted on home improvement loans
Low J.D. Power ranking
More details
Overview
Upgrade has a suite of features that make it a very attractive lender: competitive interest rates, discounts for direct pay and autopay, as soon as same-day funding, up to seven-year repayment terms, and nationwide availability. Plus, loans are available to fair-credit borrowers, and you don't need to input your Social Security number to prequalify on the website. Upgrade even offers secured personal loans, which is not common among lenders.
However, Upgrade does charge an origination fee of 1.85% to 9.99%. You must have a FICO score of at least 600 and a minimum income of $25,000 annually to qualify.
Loan amount
$1,000 to $50,000 ($3,005 minimum in GA; $6,600 minimum in MA)
Repayment terms
2 to 7 years
Fees
Origination fee
Discounts
Autopay and direct pay
Eligibility
Available in all states
Min. income
Does not disclose
Customer service
Soft credit check
Time to get funds
1 business day
Loan uses
Credit card refinancing, debt consolidation, home improvement, major purchase, other
Best for no origination fees (and low rates)
Discover Personal Loans
Fox Money rating
Est. APR
7.99 - 24.99%
Loan Amount
$2500 to $40000
Min. Credit Score
660
Pros and cons
Low minimum APR
May fund the next business day
Long loan terms available
Direct pay to creditors
No origination fee
No discounts offered
Secured loans not available
More details
Overview
Discover Personal Loans offers low APRs, repayment terms up to seven years, no origination fees, nationwide availability, and doesn't require your Social Security number to prequalify on its site. You'll need to have an annual income of at least $40,000, and a FICO score 660 or higher, to be eligible. If your credit score is fair or poor, you'll need to go elsewhere, as Discover doesn't allow cosigners.
Funds are available as soon as the next business day after loan approval.
Loan amount
$2,500 - $40,000
Repayment terms
3 - 7 years
Eligibility
Available in all 50 states
Min. income
Customer service
Soft credit check
Time to get funds
Funds can be sent as soon as the next business day after acceptance
Loan uses
Auto repair, credit card refinancing, debt consolidation, home remodel or repair, major purchase, medical expenses, taxes, vacation, and wedding
Best debt consolidation loans for bad credit
Universal Credit
Fox Money rating
Est. APR
11.69 - 35.99%
Loan Amount
$1000 to $50000
Min. Credit Score
560
Pros and cons
Borrowers with bad credit considered
No minimum income requirement
Autopay and direct pay discounts available
Can fund in one business day
High APRs
Potentially high origination fees
Not available in Iowa
More details
Overview
Universal Credit is one of a handful of lenders that offers personal loans for bad credit. If your FICO credit score is at least 560, you may be eligible for a Universal Credit personal loan. It offers loan amounts up to $50,000, repayment terms up to seven years, and discounts for direct pay and autopay. Funds are available as soon as the next business day after loan approval.
Note that rates and fees can be relatively high — you may pay an origination fee from 5.25% to 9.99%, and APRs start at 11.69%. If you get a loan with a high interest rate, consider refinancing your personal loan at a lower rate once you've improved your credit score.
Loan amount
$1,000 - $50,000
Repayment terms
3, 5, or 7 years
Fees
Origination fee
Discounts
Autopay and direct pay
Eligibility
A U.S. citizen or permanent resident; not available in DC, IA, SC, WV
Min. income
Customer service
Phone, email
Soft credit check
Time to get funds
As soon as 1 business day after acceptance
Loan uses
Debt consolidation, pay off credit cards, home improvements, unexpected expenses, home and auto repairs, weddings, and other major purchases
Best for high close rates if pre-approved
Best Egg
Fox Money rating
Est. APR
8.99 - 35.99%
Loan Amount
$2000 to $50000
Min. Credit Score
600
Pros and cons
Secured loans available
Low minimum income requirement
Scored second in J.D. Power's Consumer Lending Satisfaction Study
Funds in 1-3 business days
High close rate on loans through Credible platform
Origination fees
No discounts
Not available in DC, IA, VT, or WV
More details
Overview
Best Egg is a solid lender for a wide range of borrowers and, notably, scored second for personal loan satisfaction in J.D. Power's Consumer Lending Study. It offers competitive rates, reasonable loan terms and amounts, and personal loans for fair credit. You'll need a FICO score of at least 600 to qualify, but the lower your score, the higher your APR may be. The APR includes the interest rate and origination fees, which range from 0.99% to 9.99% with Best Egg.
Note that if you successfully prequalify with Best Egg, you may be more likely to be approved for the loan relative to other lenders you prequalify with. Based on Credible data, borrowers who chose to apply for a loan with Best Egg were more than twice as likely to be approved (relative to most other Credible partners).
Loan amount
$2,000 to $50,000
Fees
Origination fee, late fee, unsuccessful payment fee, check processing fee
Eligibility
Available in all states except DC, IA, VT, and WV
Min. income
Customer service
Phone, email
Soft credit check
Time to get funds
As soon as 1 to 3 business days after successful verification
Loan uses
Credit card refinancing, debt consolidation, home improvement, and other purposes
Best online experience
LendingClub
Fox Money rating
Est. APR
8.98 - 35.99%
Loan Amount
$1000 to $40000
Min. Credit Score
660
Pros and cons
Mobile app
Low minimum income requirement
High close rate on loans made through Credible
Available in all states
Origination fee
No discounts
Funding not as fast as some competitors
More details
Overview
LendingClub is a solid lender for good credit borrowers and some fair credit borrowers that apply directly on its website. It's easy to prequalify with LendingClub, especially if you're uncomfortable providing your Social Security number, as the company doesn't require it at the prequalification stage. (You will need to provide it if you move forward with a full application.)
While prequalification is not a guarantee that you'll be approved for a loan, LendingClub does a better job than most other Credible partner lenders at approving applicants that have successfully prequalified. In other words, you're less likely to have your application declined once you apply (if you've already prequalified). LendingClub may charge an origination fee between 3% and 8%.
Loan amount
$1,000 to $40,000
Fees
Origination fee
Eligibility
Available in all 50 states
Min. income
Customer service
Phone, email
Soft credit check
Time to get funds
Within 3 days
Loan uses
Debt consolidation, paying off credit cards
Best fast personal loans for all credit types
Upstart
Fox Money rating
Est. APR
7.80 - 35.99%
Loan Amount
$1000 to $50000
Min. Credit Score
620
Pros and cons
May fund in 1 business day
No minimum credit score requirement on lender site
Low minimum APR
Trustpilot score of 4.9/5 stars
May charge a high origination fee
No discounts offered
More details
Overview
Upstart has one of the lowest available APRs of Credible partner lenders and of all non-partners we reviewed, making it a good choice for well-qualified applicants. However, it's also is one of few lenders that doesn't have a minimum credit score requirement (if you apply on the lender's website), which makes it an option if you have bad credit or no credit history. Upstart may charge an origination fee as high as 12%, but good-credit borrowers may not be charged one at all.
Trustpilot gives Upstart 4.9 stars, which is the highest of all lenders we reviewed.
Loan amount
$1,000 to $50,000
Fees
Origination fee
Eligibility
Available nationwide
Min. income
Customer service
Phone, email
Soft credit check
Time to get funds
As soon as 1 to 3 business days
Loan uses
Pay off credit cards, consolidate debt, relocate, make a large purchase, and other purposes
Best for consolidating credit card debt
Happy Money
Fox Money rating
Est. APR
11.72 - 17.99%
Loan Amount
$5000 to $40000
Min. Credit Score
640
Pros and cons
Mobile app
Live chat
Low maximum APR
Limited loan terms available
No discounts
Origination fees
Not available in MA or NV
More details
Overview
Happy Money has been in operation since 2009 (formerly known as Payoff). It's an option for fair-credit borrowers (plus those with better credit), and notably has a relatively low top-end APR. In other words, you could qualify for a lower rate with Happy Money with fair credit, relative to other lenders that offer fair-credit loans. The company does charge an origination fee on some loans, up to 5%, but that's not as high as some other lenders' origination fees.
You should be prepared to wait a few days to get your money, as funding can take three to five days once approved. And loans aren't available in Massachusetts or Nevada. Happy Money has an A+ rating with the BBB and is ideal for debt consolidation and credit card consolidation loans.
Loan amount
$3,000 to $40,000
Fees
Origination fee
Eligibility
Available in all states except MA, MS, NV, and OH
Min. income
Customer service
Phone, email, chat
Soft credit check
Time to get funds
As soon as 2 - 5 business days after verification
Loan uses
Debt consolidation and credit card consolidation only
We evaluated the best debt consolidation loans based on factors such as customer experience, minimum fixed rate, maximum loan amount, funding time, loan terms, fees, discounts, and whether cosigners are accepted. Our team of experts gathered information from each lender’s website and customer service department, directly from our partners, and via email support. Each data point was verified by a third party to make sure it was accurate and up to date.
Read our full lender rating methodology for more information.
Debt consolidation combines multiple high-interest debts (such as credit card balances) into one monthly payment. It has a few distinct benefits:
Debt consolidation works by paying off your debt with funds from a new loan, such as a personal loan. You can get a personal loan from a bank, online lender, or credit union, and they're typically unsecured, which means you don't need to provide collateral to get the loan.
Debt consolidation loans usually have interest rates between 6% and 36%, with repayment terms between 1 and 7 years. Interest rates can be fixed or variable, depending on the type of loan. Keep in mind that a variable interest rate can go up over time, which could cause your monthly payment to rise with it. (Personal loans for debt consolidation tend to have fixed rates.)
Check out: How does debt consolidation work?
To find out if debt consolidation is a good idea, add up your current loan amounts and approximate your overall interest rate. For instance, if you have two equal balances you want to consolidate, one with a 20% interest rate and the other with a 30% rate, the average interest you're paying is 25% ((20% + 30%)/2). Then use the a debt consolidation calculator to see how much you can save at different interest rates and loan terms.
It's best to prequalify for a loan first so you have an idea of the rates you might qualify for. Prequalification won't hurt your credit and only takes a few minutes. But you may need to provide some personal information to get customized rate estimates, like your annual income and Social Security number. Note that when you apply for a loan, most lenders conduct a hard credit pull that could temporarily ding your score.
To find the best debt consolidation loan, compare multiple lenders according to these key criteria.
- APR: The annual percentage rate includes the interest rate and any upfront fees. Choose a lender with lower APRs to save yourself money over the long term. Also, check the rates offered and compare them to what you’re paying now, making sure you know whether your APR would be fixed or variable. Variable rates are subject to change over time.
- Fees: Some lenders charge origination fees, which are generally taken out of your loan amount before you receive the funds, or application fees. Look for a lender that offers low or no fees to save the most on your loan.
- Repayment terms: Most personal loans have repayment terms of 1 to 7 years. Shorter repayment terms tend to mean a higher monthly payment, but the overall interest costs are generally lower. Longer repayment terms, meanwhile, may help your payments fit more easily into your budget, but you could end up paying more in interest over time.
- Loan amount: Check your lender’s minimum and maximum loan amounts to make sure they fit your needs. Common loan amounts range from $600 to more than $100,000, depending on the lender.
- Minimum credit score: Your credit score may affect the loans you qualify for, as well as the rates you receive. Check each loan’s minimum credit score requirements to make sure it’s an option for you.
- Time to fund: If you need your funds quickly, many lenders can fund your loan as soon as the same or next business day.
- Customer reputation: Don’t forget to check out customer reviews, too, to check for any red flags like poor customer service or hidden fees.
Follow these steps to find and apply for a debt consolidation loan.
Here are some other options you can consider to pay down your high-interest debt.
Instead of borrowing the funds to pay off your debts, do it yourself with careful budgeting and saving.
DIY debt payoff usually takes one of two forms. The first is the so-called debt snowball method: While making minimum payments on all of your debts, apply any extra funds toward your smallest debt first. Once you’ve eliminated it, use those freed-up funds to pay the next-smallest debt, until all your debts are gone. This method won’t save you the most on interest, but it can work well for those who are motivated by smaller, quicker wins.
The second method is the debt avalanche: While once again making minimum payments on all of your debts, apply all extra funds toward the debt with the highest interest rate, then, as it is paid off, use those freed-up funds to work on the next debt in line. This method can save you the most in interest, but it generally takes longer to see results.
Another way to consolidate your debt is to transfer your balances to a credit card with a 0% APR promotional period. Doing a balance transfer will usually incur a fee — a percentage of the balance, such as 3% — so keep that cost in mind. Also, make sure you can budget for the monthly payment. 0% interest periods don't last forever. If you can't pay off the transferred balance by the time it expires, you'll start paying the card's standard APR on the remainder — which could be over 30%.
Keep in mind
Balance transfers work best when you can pay off the entire debt during the promotional period; otherwise, you’ll owe interest on the new balance when the APR returns to its much higher standard rate. Keep annual fees in mind, too.
When you need funds for debt payoff, tapping into your home equity may be an option. You can do this via a home equity loan, a home equity line of credit (HELOC), or a cash-out refinance. Whichever method you choose, you’ll use the proceeds to pay off your debts.
But home equity-based loans can take a month or more to get approved for. And since the payment term could be up to 30 years, you could end up paying more in interest — over the life of the loan — relative to other options.
Remember
While home equity loan products can offer lower APRs than personal loans, they are also secured by your home, meaning you could lose it to foreclosure if you don’t make your payments.
If you can't qualify for a loan to consolidate your debt or can't afford your monthly payments, you may need to look into debt relief. Debt relief means you get some of the debt forgiven, or you can pay it back at a lower interest rate negotiated by you or on your behalf.
If you've fallen behind on payments or think you will, try negotiating with your creditors. Explain your financial hardship and ask whether they’ll adjust your debts, work out a payment plan, or settle for a lesser amount.
But just like missing payments, debt settlement can damage your credit score, and that damage can stay on your report for up to seven years. Also, be wary of debt settlement companies that push you to stop making payments. This could leave you open to more harm to your credit and even potential legal action. You may be better off using a reputable, nonprofit credit counselor or agency to negotiate a debt management plan (DMP) with your creditors. You can find a list of approved credit counseling agencies from the Department of Justice.
As a last resort, you may consider bankruptcy. Bankruptcy can discharge your debts, or create a payment plan for them, depending on the type you file. Just know that bankruptcy stays on your credit report for seven to 10 years, and can damage your score significantly (though your score may already be suffering if you're considering it).
Use the funds you free up from filing bankruptcy to start rebuilding your credit immediately. You may be able to get a secured credit card not long after bankruptcy, and within a few years, could even apply for a mortgage. But lenders will be much more careful in lending to you — which means you'll pay higher rates for years, and may not be approved at all, especially if you've continued to miss or make late payments.
Important
If you’re considering bankruptcy, it’s a good idea to talk with a bankruptcy attorney so you can explain your situation and more fully understand the process, options, and consequences.
Debt consolidation can help you pay down your debt, save money by lowering your interest rate, and simplify your finances. However, consolidating your debt may mean it takes longer to pay off, and sometimes you could pay more in fees and finance charges than if you had paid off each debt individually. Compare how long it would take to pay off your debt and how much you’ll pay in interest for each method before you decide.
Yes, debt consolidation can temporarily lower your credit score when you first apply for a consolidation loan, home equity loan, mortgage refinance, or balance transfer credit card. That’s because lenders will run a hard credit check, which can drag your score down about five points or so, although it depends on your credit profile. On the plus side, consolidating your debt may also bring your score up — and quickly — especially if you consolidate credit card debt, which can significantly reduce your credit utilization.
You may be able to qualify for a debt consolidation loan with bad credit, but you'll have fewer options and it could cost you more. Lenders usually offer their best rates to borrowers with good or excellent credit, so if yours is fair or poor, you may only qualify for the highest rates. It’s important to compare the APR of a debt consolidation loan to what your current creditors are charging you.
The best places to find debt consolidation loans are banks, credit unions, and online lenders. These companies can offer low interest rates and low or even no fees. And don’t forget to get multiple quotes so you can compare lenders — it’s the best way to find a good deal on a loan.
Related articles:
Meet the contributor:Mary Beth Eastman
Mary Beth Eastman is a Credible authority on personal finance. Her work has been featured by The Balance, Money Under 30, and more.
ncG1vNJzZmivp6x7p7vXm6ysoZ6awLR6wqikaJ6frXquu82esGiolafAsLrApWSlp5GjwHCuxKyrZpyVl8Fur86nqqikmZmutbXOp2Slp5GjwA%3D%3D