Debt Consolidation Loans for Bad Credit

There are options out there for poor credit

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Looking for a debt consolidation loan with bad credit can be tricky. Even if you qualify for one, it may not be at the most competitive interest rates. That doesn’t mean you can’t find a loan and pay down your debts faster. It means you need to take a more careful look at such things as the cost of borrowing, including fees and penalties, loan duration, and how much interest you’ll pay overall.

Debt Consolidation Loans for Bad Credit of September 2022

Below are Investopedia's top-rated lenders, loan amount and availability may vary by state.
Best Overall
Upgrade
Investopedia's Rating
4.3
  • 6.95% - 35.97% APR with Autopay Discount
  • 550 Estimated Min. Credit Score
  • $1,000 - $50,000 Loan Amount
Runner Up
Avant
Investopedia's Rating
4.1
  • 9.95% - 35.95% APR
  • 580 Estimated Min. Credit Score
  • $2,000 - $35,000 Loan Amount
Best Maximum Loan Amount
First Tech Federal Credit Union
Investopedia's Rating
4.2
  • 6.70% - 18.00% APR
  • Not Disclosed
    This lender does not offer prequalification.
    Estimated Min. Credit Score
  • $500 - $50,000 Loan Amount
Best For Fast Funding
Rocket Loans
Investopedia's Rating
4.2
  • 7.73% - 29.99% APR with Autopay Discount
  • 580 Estimated Min. Credit Score
  • $2,000 - $45,000 Loan Amount
Best for Small Loans
PenFed Credit Union
Investopedia's Rating
3.7
  • 7.74% - 17.99% APR
  • 620 Estimated Min. Credit Score
  • $600 - $50,000 Loan Amount
If youre not seeing anything in the results that are a good fit for your needs, consider warranties from these companies:
Why Trust Us
38
Lenders reviewed
40
Loan features considered
1,520
Data points analyzed
112
Primary data sources used
Investopedia collected key data points from several lenders to identify the most important factors to borrowers. We used this data to review each lender for fees, accessibility, repayment terms, and other features to provide unbiased, comprehensive reviews to ensure our readers make the right borrowing decision for their needs.

Best Overall : Upgrade

Investopedia's Rating
4.3

  • APR Range: 6.95% - 35.97%
  • Time To Receive Loan: 1 Days
  • Loan Amount: $1,000 - $50,000
Why We Chose It

Upgrade is an online lender founded in 2017 and based in San Francisco. We rated it as the overall best lender because it offers competitive rates, fast funding, and the ability to use join applications. What also stands out about Upgrade are the tools it has for helping borrowers to monitor their credit and improve their overall credit situation. Rates start at 5.94%, and the maximum amount you can borrow is $50,000.

Pros
  • Joint applications allowed

  • Prequalification available

  • Funds available as soon as the next business day

Cons
  • Low maximum loan amount compared with other lenders

  • An origination fee of up to 8%

  • Late fee if a payment isn’t made within 15 days of the due date

Other important information:

  • Minimum/maximum amount you can borrow: $1,000 to $50,000
  • Qualification requirements: There is a minimum credit score needed to receive a loan, plus other factors such as income and debts. 
  • Repayment period: 24 to 84 months
  • Restrictions: Borrowers need to opt into autopay to receive the lowest rates.
  • Fees: Upgrade charges an origination fee of 2.9% to 8% and a $10 late payment fee. 
  • APR range: 6.95% to 35.97%
  • Time to receive funds: You can get your money as soon as the next business day.

Runner Up : Avant

Investopedia's Rating
4.1

  • APR Range: 9.95% - 35.95%
  • Time To Receive Loan: 1 Days
  • Loan Amount: $2,000 - $35,000
Why We Chose It

Avant is an online personal loan lender that stands out because of fast funding times, the ability to refinance your loan, and minimal fees. However, it’s our runner up because of its higher starting interest rates—annual percentage rates (APRs) start at 9.95%. As with Avant, borrowers can receive up to $35,000, and there is a prequalification option. This allows you to check whether you are likely to qualify without incurring a hard credit inquiry, which can lower your credit score temporarily.

Pros
  • Prequalification available

  • No early or prepayment penalties

  • Funding times as soon as the next business day

Cons
  • Maximum loan amount lower compared with other lenders

  • Administrative, late, and dishonored payment fees

  • Higher minimum APR compared with other lenders on our list

Other important information:

  • Minimum/maximum amount you can borrow: $2,000 to $35,000
  • Qualification requirements: Most Avant customers have a credit score between 600 and 700. Avant also imposes income requirements to determine how much you can borrow.
  • Repayment period: 12 to 60 months
  • Restrictions: You can only refinance an Avant loan once. 
  • Fees: There is a 4.75% administrative fee that comes out of your loan directly. There are also late and dishonored payment fees. 
  • APR range: 9.95% to 35.95%
  • Time to receive funds: You can get your money as quickly as the next business day.

Best Maximum Loan Amount : First Tech Federal Credit Union

Investopedia's Rating
4.2

  • APR Range: 6.70% - 18.00%
  • Time To Receive Loan: 0 Days
  • Loan Amount: $500 - $50,000
Why We Chose It

First Tech Federal Credit Union offers competitive personal loans for less than stellar credit, with rates starting at 6.70%. Though First Tech Federal also offers loans from $500 to $50,000, what stands out about First Tech is that its loan terms are longer, with a maximum of 84 months. As with all credit unions, you need to become a member, which you can do by joining the Financial Fitness Association or Computer History Museum. 

Pros
  • Wide range of loan amounts, with one of the lowest and highest on our list of lenders

  • No application fees, origination fees, or prepayment penalties

  • Ability to apply with a cosigner

Cons
  • No prequalification available

  • Must be a member of the credit union to receive a loan

  • Charges late fees

Other important information:

  • Minimum/maximum amount you can borrow: $500 to $50,000
  • Qualification requirements: First Tech Credit Union will look at income, debts, and whether you have a variable bank account, and you must have reached the age of majority in your state. 
  • Repayment period: 24 to 84 months
  • Restrictions: Borrowers need to be a member of the credit union.
  • Fees: Variable fees for late payments.
  • APR range: Starting at 6.70%.
  • Time to receive funds: You can receive loan proceeds as quickly as the next business day.

Best For Fast Funding : Rocket Loans

Investopedia's Rating
4.2

  • APR Range: 7.73% - 29.99%
  • Time To Receive Loan: 1 Days
  • Loan Amount: $2,000 - $45,000
Why We Chose It

A division of Quicken Loans, Rocket Loans offers debt consolidation loans with rates as low as 7.727% with automatic payments and funding as soon as the same business day. Although it offers a higher minimum loan amount compared with other lenders, you can lower your rate if you sign up for automatic loan payments.

Pros
  • Funding as soon as the same business day

  • Prequalification available

  • Rate discount when opting into autopay

Cons
  • No co-signers allowed

  • Origination fee charged

  • Higher minimum loan amount compared with other lenders

Other important information:

  • Minimum/maximum amount you can borrow: $2,000 to $45,000
  • Qualification requirements: Applicants should have a recommended minimum credit score of 580. There may be other eligibility requirements, such as income and having reached the age of majority in your state.
  • Repayment period: 36 to 60 months
  • Restrictions: Co-signers are not allowed.
  • Fees: There is a 1% to 6% origination fee (deducted from the loan amount) and a $15 late fee.
  • APR range: 7.727% to 29.99% (lowest rate with autopay)
  • Time to receive funds: You can get your money as quickly as the same business day

Best for Small Loans : PenFed Credit Union

Investopedia's Rating
3.7

  • APR Range: 7.74% - 17.99%
  • Time To Receive Loan: 1 Days
  • Loan Amount: $600 - $50,000
Why We Chose It

PenFed Credit Union offers personal loans that you can use for debt consolidation, with loan amounts starting as low as $600. Rates are competitive, which is rare for loans with a low minimum credit score requirement. Although you do need to become a member to receive funding, doing so is less restrictive than with other credit unions. You can become a PenFed member simply by joining, there are no military or donation requirements.

Pros
  • No origination fees or prepayment penalties

  • Co-signers allowed

  • Wide range of repayment terms

Cons
  • Must be a member of PenFed

  • Prequalification option can involve more than just a application via web

Other important information:

  • Minimum/maximum amount you can borrow: $600 to $50,000
  • Qualification requirements: A minimum credit score of 650 is recommended before applying for a loan. PenFed will also look at other factors, such as your income, plus your co-signer’s credit history and debts if applying with one. 
  • Repayment period: 12 to 60 months
  • Restrictions: In order for PenFed to fund your personal loan, you’ll need to become a member of the credit union.
  • Fees: There is a $29 late lee, but there are no origination fees or prepayment penalties. 
  • APR range: Starting at 7.74%
  • Time to receive funds: You can get your money as soon as the next business day.

Compare the Debt Consolidation Loans for Bad Credit of September 2022

Overall Rating Best For
APR Range
Average Origination Fee
Late Fee
Time To Receive Loan
Loan Amount
Latest Repayment
Reset All
Upgrade
4.3
Best Overall 6.95% - 35.97% 2.90% - 8.00% $0.00 - $10.00 1 Days $1,000 - $50,000 84 Months Check Rates
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Avant
4.1
Runner Up 9.95% - 35.95% 0.00% - 4.75% $25.00 - $25.00 1 Days $2,000 - $35,000 60 Months Check Rates
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First Tech Federal Credit Union
4.2
Best Maximum Loan Amount 6.70% - 18.00% 0.00% - 0.00% $15.00 - $15.00 0 Days $500 - $50,000 84 Months Check Rates
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Rocket Loans
4.2
Best For Fast Funding 7.73% - 29.99% 1.00% - 6.00% $15.00 - $15.00 1 Days $2,000 - $45,000 60 Months Check Rates
Hide, not for me
PenFed Credit Union
3.7
Best for Small Loans 7.74% - 17.99% 0.00% - 0.00% $29.00 - $29.00 1 Days $600 - $50,000 60 Months Check Rates
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*APR ranges for some companies include a discount for automatic payments or existing bank customers.

Frequently Asked Questions

How Can You Get a Debt Consolidation Loan With Bad Credit?

Getting a debt consolidation with bad credit may limit your choices, but it’s not impossible to find a lender. First, it’s a good idea to check your credit score to see where you stand, then look for lenders that have lower credit requirements to increase your chances of getting 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 what rates you’re currently paying with existing debt to see whether it’s worth it to make the switch.

Where Can You Get a Debt Consolidation Loan With Poor 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 a loan.

Online lenders, on the other hand, typically don’t require that you become a member while offering the same types of customer service online or on the phone. However, if you’re not comfortable with managing and paying your loan online, then this may not be the best choice.

What Credit Score Do You Need to Get a Debt Consolidation Loan?

Typically, the higher your credit score, the better your chances of getting a debt consolidation loan. Even though many of the lenders on our list require a minimum credit score of either 580 or 600, you may need to meet other requirements, such as a certain annual income and debt-to-income ratio limits, to be approved.

What Is the Best Way to Consolidate Debt?

In addition to shopping around for debt consolidation loans, one of the best ways to be approved for a competitive rate is to add a cosigner. This ideally should be someone with a good credit profile, one better than yours, whom you trust and who understands the responsibilities and consequences of cosigning a loan. Otherwise, you can work to improve your debt-to-income ratio by increasing your income or further paying down your debt before submitting an application.

Options

Home Equity Loan

This type of loan involves tapping into the equity of your home and can offer a low-interest rate, as it’s a secured loan. One major risk is that you’re putting up your home as collateral, which means that if you fail to repay the loan, you’re at risk of foreclosure

Debt Management Plan (DMP)

You can work with a certified credit counselor to lower the fees with your creditors. Then you’ll consolidate your payments, making one payment to your counselor, who will then pay your creditors. This may save you money, but most counselors charge a monthly fee. Also, a DMP takes a few years to complete. 

Bankruptcy

Filing bankruptcy can help you with canceling your debt or negotiating a deal with your creditors. However, you’ll damage your credit, making it much harder to be approved for certain loans in the future.

The Bottom Line

Having bad credit doesn’t mean that there aren’t any debt consolidation options for you out there. It could mean that you’ll be qualified for a higher APR than someone who is more creditworthy, but as long as the rate is lower than what you’re currently paying, it can save you hundreds, even thousands of dollars in the long run.

Compare what’s available and learn what it takes to increase your chances of approval so that you can improve your financial situation. If you find that a personal loan isn’t the best choice for you, do some research on the alternatives and see whether you’re able to take on the risk. In some cases, it’s also best to wait until your credit situation improves so that lenders are more likely to approve you for a loan with terms and rates with which you agree.

How We Chose the Best Debt Consolidation Loans for Bad Credit

Investopedia is dedicated to providing consumers with unbiased, comprehensive reviews of personal loan lenders for all borrowing needs. We collected over 25 data points across more than 50 lenders—including interest rates, fees, loan amounts, and repayment terms—to ensure that our content helps users make the right borrowing decision for their needs.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. Upgrade. "Consolidate Your Debt," See footnote.

  2. Avant. "Debt Consolidation Loans."

  3. First Tech Federal Credit Union. "Personal Loans."

  4. Rocket Loans. "Rocket Loans: Online Personal Loans."

  5. Rocket Loans. "Debt Consolidation Loans," See footnote.

  6. PenFed Credit Union. "Personal Loans."