|Lender||APR Range||Minimum loan amount||Maximum loan amount||terms||Recommended credit score|
|To improve Best overall||5.94% to 35.97% with automatic payment rebate||$1,000||$50,000||24-84 months||580+|
|Before Finalist||9.95% to 35.99%||$2,000||$35,000||24–60 months||600+|
|First Tech Federal Credit Union Best maximum loan amount||From 6.70%||$500||$50,000||24–84 months||Unlisted|
|Rocket Loans Ideal for quick financing||5.97% to 29.99% with automatic payment rebate||$2,000||$45,000||36–60 months||580+|
|PenFed Credit Union Ideal for small loans||From 4.99%||$600||$50,000||12–60 months||650+|
How can you get a debt consolidation loan with bad credit?
Getting debt consolidation with bad credit can limit your choices, but finding a lender isn’t impossible. First, it’s a good idea to check your credit score to see where you stand, then research lenders who have lower credit requirements to increase your chances of being approved.
Even though your options may be limited, you’ll want to shop around and compare lenders to see who will offer you the best rates and terms. Then compare that to the rates you’re currently paying on existing debt to see if it’s worth making the switch.
Where can you get a debt consolidation loan with bad credit?
Credit unions and online lenders tend to offer better rates for those with poor credit. Credit unions are great if you’re interested in in-person service, but in most cases you’ll need to become a member (usually by paying an annual fee or opening a savings account) in order to be approved for one. ready.
Online lenders, on the other hand, generally don’t require you to become a member while offering the same types of customer service online or over the phone. However, if you’re not comfortable with managing and paying your loan online, this may not be the best choice.
What credit score do you need to get a debt consolidation loan?
Generally, the higher your credit score, the better your chances of getting a debt consolidation loan. Although many lenders on our list require a minimum credit score of 580 or 600, you may need to meet other requirements, such as certain annual income and debt-to-equity limits, to qualify. approved.
What is the best way to consolidate debt?
Along with researching debt consolidation loans, one of the best ways to get approved for a competitive rate is to add a co-signer. Ideally, this should be someone with a good credit profile, better than yours, whom you trust, and who understands the responsibilities and consequences of co-signing a loan. Alternatively, you can work to improve your debt-to-income ratio by increasing your income or paying off more debt before submitting an application.
Are there alternatives to debt consolidation?
Here are a few options, each with their own pros and cons.
Home Equity Loan
This type of loan involves tapping into the equity in your home and can offer a low interest rate because it is a secured loan. A major risk is that you are putting your house up as collateral, which means that if you don’t repay the loan, you risk being foreclosed.
Debt Management Plan (DMP)
You can work with a certified credit counselor to reduce fees with your creditors. Then you will consolidate your payments, making one payment to your advisor, who will then pay your creditors. It can save you money, but most advisors charge a monthly fee. Also, a DMP takes a few years to complete.
Filing for bankruptcy can help you write off your debt or negotiate a deal with your creditors. However, you will damage your credit, which will make it much more difficult to approve certain loans in the future.
Having bad credit does not mean that there are no debt consolidation options for you. This could mean you’ll qualify for a higher APR than someone who’s more creditworthy, but as long as the rate is lower than what you’re currently paying, it could save you hundreds or even thousands of dollars in the long run. term. .
Compare what’s available and learn what it takes to increase your chances of approval to improve your financial situation. If you find that a personal loan isn’t the best choice for you, research the alternatives and see if you’re up to the risk. In some cases, it’s also best to wait until your credit situation improves so that lenders are more likely to approve a loan for you with terms and rates you agree with.
How We Choose The Best Bad Credit Debt Consolidation Loans
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