A lot of things can happen in life that can put you in a situation where you need a surefire way to kill your debts. But, things are not always simple, and sometimes life throws you a curveball. If your credit score is poor, this can be problematic, and one solution is to take out a loan to consolidate that debt.
That way, you will have an easier time with your monthly payment, and you will also have another way to evaluate how you are paying off your obligations. In these cases, having access to more information cannot be a bad thing.
We do not want to waste your time, so all of the companies discussed here meet a set of requirements that will make your life easier. Furthermore, they have all guaranteed your credit score will not be negatively affected by seeing what they have to offer.
You can pre-qualify with all of them, and when you do, they will actually send you a breakdown of your chances of getting approved. To make things easier on you, we have divided the companies into two groups.
First, we will go through those companies that will loan you up to $10,000. Second, we will go through the companies who will consider you for a loan of a minimum of $10,000. Lastly, we will also answer some common questions.
So, after you are done reading our guide, you will have a good idea of what to expect.
Our Top List of the Top Debt Consolidation Loan Companies:
- CashUSA: Overall Best lender for Debt Consolidation Loans
- BillsHappenÂ®: Most Reliable Debt Consolidation Services
- Credit Loan: Low-Interest Debt Consolidation Companies
- BadCreditLoans: Consolidate Credit Card Debt, Best For Bad Credit Loans
Let us look at our first four companies.
#1. CashUSA: Overall Best lender for Debt Consolidation Loans
CashUSA is a great option to go with if you need a loan of up to $10,000, and we gave it an overall rating of 4.7/5.0 stars. In addition, they offer contracts from anywhere between 3 months and 6 years.
Their interest rates vary anywhere between 5.99% and 35.99%, and here is an actual example of one of their offers: $5,000 at 18.9% APR = $179.35/month for 36 months ($6,456.68 total).
There are a few things that need to be in order before you start pre-qualification, as these personal loans are unsecured. You must either have permanent residency or citizenship within the United States, and you must also be over 18 and make at least $1,000 per month after taxes.
You must also have a working email, phone number, and bank account. This company gives you a guaranteed decision after you pre-qualify, and if you are approved, you will be put in direct contact with a lender who has an offer for you.
#2. BillsHappenÂ®: Most Reliable Debt Consolidation Services
BillsHappen scored 4.7/5.0 stars, and they offer debt consolidation loans anywhere between $500 and $5,000 with varying interest rates and loan terms. Here is an actual example of a loan: $4,000 loan at 15.0% APR = $193.95/month for 24 months ($4,654.72 total).
This company helps its clients match with lenders and maintains its reputation by providing an easy process for requesting debt consolidation loans and excellent data protection. They require a few things for pre-qualification. First, you must be a citizen of the United States or have permanent residency.
They also need you to have an active bank account and a social security number. They do not charge any fees when connecting you to their network, so you can easily find a lender after pre-qualification.
#3. Credit Loan: Low-Interest Debt Consolidation Companies
Credit Loan scored 4.6/5.0 stars, and they offer loans starting as low as $250 all the way up to $5,000 with varying interest rates and terms. Here is an actual example of a loan: $4,000 loan at 15.0% APR = $193.95/month for 24 months ($4,654.72 total)
This company started in 1998 and has helped over 750,000 people to date. Their pre-qualification process is extremely fast, and all it takes is filling in one form. Once you are approved, you can expect the wire to your account within 24 hours.
#4. BadCreditLoans: Consolidate Credit Card Debt, Best For Bad Credit Loans
BadCreditLoans scored 4.6/5.0 stars, and you can take out a debt consolidation loan starting at $500 and going up to $10,000 with interest rates between 5.99% and 35.99% and terms ranging anywhere from 3 months to 5 years. Here is an actual example of a loan: $2,000 loan at 19.9% APR = $183.63/month for 12 months ($2,203.56 total).
They started operating in 1998, and they specialize in helping people with a bad credit score. If you need your debt consolidated and your credit score is subprime, their pre-qualification process is near-instant.
To get started, you have to be an adult citizen of the U.S. You must also have a reliable salary every month and an active bank account and email address.
Companies Who Will Finance Your Debt Over $10,000
It could be that you are in a situation where $10,000 simply will not cut it, and debt consolidation requires a larger sum.
So, we found four more companies that can connect you to a lender willing to go above $10,000, and they all accept you regardless of credit score. It is easy to pre-qualify, and once you are approved, you will receive the money quickly.
#5. Personal Loans
This company specializes in customers with less-than-ideal credit, and we gave it a rating of 4.4/5.0 stars.
In order to pre-qualify, you have to be at least 18 years of age and a resident in the U.S. You also need a consistent salary, a functioning social security number, and a valid bank account.
This company allows you to get funding as high as $50,000. They use a soft credit check, so there is no danger to your credit score. In addition, their rates are competitive within their field, mostly due to their investments in underwriting technology, which is fully proprietary.
Once you have gone through the pre-qualification process, Upstart will perform a hard credit check before the deal is sealed.
This company works along with WebBank and can grant you funding up to $40,000, where their rates and terms vary. Pre-qualification for funding is done via a soft credit pull by filling out their forms. They will then give you an estimate as to what kind of rates you can expect.
All interest rates are fixed, without any penalties for prepaying (origination and being late do carry a fee, though). The general term for repaying is between three and five years.
As long as you have credit scoring over 620, Upgrade has a pre-qualification process allowing funding as high as $50,000. Once pre-qualification is done, you will get matched with one of two partner businesses, including Cross River Bank for New Jersey and Blue Ridge Bank for Virginia.
Origination fees can be as high as 8%, and after 15 days of not paying, they can have penalties added in fees.
Companies Who Will Finance Your Debt as High as $10,000
We found four businesses that can help you out if you have a poor credit score. In fact, they actually specialize in doing so. Overall, these are services that match lenders with consumers. These businesses will use their own networks to find a deal that works for you, and the best part is that they can do this while performing what is known as a soft credit check.
That way, your credit score is not harmed during the pre-qualifying process, as no actual hard credit inquiries are made. So, you can rest easy knowing your credit score is safe.
Once you get your approval in order, the money is yours in the span of 24 business operating hours. Once you have it, you can use it however you want â debt consolidation included.
How You Can Consolidate Your Debt Via Loans
When you consolidate debt, generally with an unsecured loan, you use that money to take care of whatever it is you owe, such as credit, debt, or delinquent payments.
However, it should not just be any loan. A personal loan works best because it allows you to utilize the money however you see fit. Unlike student or car loans (or even mortgages), you are not bound to specific ways of using the money. Also, you will probably never find a better rate than loans offered for students by the federal government.
In best-case scenarios, whatever rate you have should be beneath the average weighted rates you currently pay. You can then lower what it is you end up paying over the interest. This even works if whatever loans you took out to consolidate debt have a longer repayment plan than what you currently have.
Additionally, shady lenders exist and will try to get you on the hook for what are known as payday loans. However, you are way better off getting funding via personal loans rather than falling victim to predatory business practices.
How it works is pretty simple:
- Evaluate your current situation and debts, and ensure you know how much you pay per month and the rate of interest. Make sure you have whatever it is you pay for your debts each month in total, along with all of the outstanding credit.
- Do research about the companies who can help you by reading our guide and following the links of the company you think can help you best. The links will take you right where you need to be.
- Make sure you go through the pre-qualification process and fill in the required information. These tend to include things like how much you pay for your house, how much you make, some basic personal details, and, of course, the loan amount of funding you are looking to get.
- Once you have been approved for pre-qualification, they will put you in contact with a direct lender using a matching service. If you are trying to use direct debt to find a lender to consolidate, you can also simply follow the steps. Whatever your situation, they will ask you for more details on the actual form for the debt consolidation loan. However, you are not required to accept any offer for funding simply by sending in the form.
- Once the company has agreed and the deal has been struck, you will be sent all of the information you need, including the loan terms, what you pay per month, the actual loan amount, and, of course, the interest rates. Depending on the situation, you may be allowed extra features that give you some ability to set some demands. Specifically, make sure you are not paying any penalties for prepaying and that you can actually afford it.
- Once you have accepted, you will need to agree and sign off on the form. It takes several days, and then the funds will be made available to you with a potential origination fee already subtracted.
- The funding you get can be used to pay off your current debts via the debt consolidation process. This works even if you have penalties for prepayment of interest that has accrued. Double-check the debt consolidation loan amount you need to pay off all debts and make the monthly payment, which you can do via check or online.
- The company will then send you their statement either by email or letter, which will show you currently have a credit card balance of $0. If this is not the case, pay immediately or risk accruing interest.
- Your previous debts have now been consolidated through your new funding. A great way to make sure nothing goes wrong is to have your money and payments wired automatically, so keep that option in mind. If you want to make a real impression, you can also pay extra, provided you are able.
Overall, consistency is key when consolidating your debt, and it would be a bad idea to start building up other debts while you are dealing with this one. If you are a credit card user, always make sure they are paid off.
As long as you do not accrue any new debt, you will ensure you have the most funds possible at your disposal so you can consolidate that debt fast. However, keep in mind that getting even deeper in debt while having all of this going on is the perfect recipe for a downward financial spiral to the point you may go bankrupt.
What if You Have Bad Credit?
Every company we discussed is open to working with you, even if your credit score is not the best. A few do have a minimum score they require, but others are more open-minded and take all of your financial factors into account. Should they approve you, the funds will be made available to you within 24 business hours.
It could be that your credit history complicates matters. In that case, you may want to think about:
- Having someone else co-sign: Co-signers are people who will make sure your debt gets paid even when you cannot do so, and it is best if this person has no credit issues themselves. Generally, co-signers only get caught up in the mix when you fail to pay on time because, at that point, the company will go to them for the money that is owed.
- Put up extra collateral: A debt consolidation loan is considered secured whenever it is backed up by other equity that will be forfeited in case of delinquent payments. These options are rare, but when exercised, they could result in the company turning whatever collateral you provided around for cash.
- Think about transferring balances: If your only problem is related to credit cards, you may be better off doing a balance transfer. The best-case scenario is to start with a new credit card that allows balance transfers that have 0% APR for a year to a year and a half.
- Raise your credit: Raising your credit score could be the strategy you need to adopt in order to get through the qualification process and start consolidating. This means you can never miss a payment, never run up your balances, and ensure your credit reports are scoured clean of any wrong or detracting data. Credit repair services can help you, but this can also be done solo.
Some companies, like Upstart, take a more esoteric approach and look at more than just your FICO scores. They have an A.I.-based model that approves more than 27% of clients with an APR below 16%. They will also take things like your education level and work history into account.
Innovation is always driving and enlarging the potential clients base for qualification, including those with poor credit. So, there is always hope for funding on the horizon.
Is There a Minimum Score That Is Needed in Order to Consolidate Debt?
No law is written in stone when it comes to minimum scores. Every company is unique, and they all have their own standards and methods to underwrite and choose debt consolidation loans for approval.
It is true that many companies will not look at your credit score during the pre-qualification process. However, you should keep in mind that at the end of the day, a lot of lenders might still choose to do so when deciding upon approval.
You often hear about needing a FICO score of 620 at most, or else you are out of luck for a personal loan. However, there have been cases where people with scores even at 520 have received approval. At the end of the day, there are several factors that have to do with you personally that will decide the outcome.
We talked before about how younger companies (such as Upstart) use new strategies for the underwriting process. Research has shown they can estimate how creditworthy you are based on the data on your mobile phone.
Below are a few pertinent facts that can be found just by granting access to the app on your phone so it can start the underwriting process:
- The frequency with which you charge the phone (this indicates you are responsible in nature)
- The distance you cover per 24 hours (research shows those who visit more varying locations can be more easily relied upon)
- The debt consolidation loan amount of texting traffic per 24 hours (direct correlation with likelihood of being worthy of credit)
- Including surnames in phone contacts (doing so, you will be perceived as more detail-oriented)
- Timing your calls so you do not pay the highest rates (shows you know how to handle money)
- Gambling (which, if you are, actually surprisingly works in your favor)
- If you OVER CAPITALIZE text, instead of using proper punctuation (they unironically will hold this against you, so stop)
The bright side is that there is really no reason to be hesitant to look at what is out there even if your credit score is not the best. The FICO scoring system will not last forever, and over time, the market will find other methods to calculate how much funding you can receive.
Can My Credit Score Be Harmed if I Consolidate My Debt with a Loan?
Most application processes for loans allowing you to consolidate your debt will mandate a hard credit check of your credit history at some point. Simply put, they are going to contact either Equifax, Experian, or TransUnion, which are credit bureaus, and pull your credit report.
Hard credit checks have the potential to momentarily decrease your score by five to ten points. However, this only lasts for two years at most. After that, to pre-qualify, they will only perform a soft credit check that will leave your score alone.
You can still view these soft checks on your report, but no one else can. Any hard credit check does require your permission or an application for credit, but this is not the case for soft inquiries.
According to FICO, the reason hard checks affect your score (especially multiple in quick succession) is that it shows you may be in an economic bind.
Virtually every company will make sure to have your payments reported at the relevant bureaus, which means you alone are ultimately responsible for managing and raising credit.
Making sure you pay on time makes you worthy of credit, and the best debt consolidation can be used to relieve economic pressure on your profile regarding credit. Doing so will lower both your CU (credit utilization) and your DTI (debt-to-income ratio), so it can aid you in sprucing up any profile.
On the other hand, not paying on time will cause your score to go down. In particular, delinquent payments of more than one monthly payment will show up along with any write-offs or collections, which could affect your reports for as many as 84 months.
So, Which Debt Consolidation Loan Company Is Best?
Every company we have discussed in this guide is trustworthy and will keep to their end of the bargain. Still, you must also make sure you do the same thing from your end and avoid accruing any other debts while you pay this off.
Simply put, everything is on you.
Companies providing debt management, on the other hand, will take an active hand in making sure your debts get paid as part of the debt consolidation process. Businesses in these makers are competing for you to come to them. Unfortunately, some are shady. But, you can look at how we rated the top services, so you can get started here.
The Best Methods for Debt Consolidation
It can be a good move to consolidate your debt, provided you do so intelligently and with your personal affairs in mind:
- Take out a loan personally: Personal loans are often used for unsecured debt consolidation. A loan like this does not just work on credit card debt, so you have more freedom with the funds. This is worth considering if you have a hard time qualifying for a credit card via a standard promotion.
- Acquire relief for your debt: Most companies will strike up a deal where a part of your debt is forgiven via consolidating your payments through a settlement. You will no longer have to pay your debtors directly and will send the money to the company instead. They will then take care of the rest after setting up a plan. Doing this will lower your credit score, but it still beats going bankrupt.
- Transfer your balance to another card: This method works well if you have had past issues with credit cards. So, you can get a fresh card with a balance transfer rate of 0% APR. A lot of companies offer this on introduction for a year to a year and a half. But, whatever card you take out must match your total loan amount, and often you do need a minimum credit score of 640.
Whatever you choose to do, keep the following things in mind:
- Always make sure you can afford to pay so you will not go delinquent on any payments.
- Do not acquire any new debt until you are done with this one.
- Make a budget and stick to it.
- Whatever rate you agree to for consolidating debt should be less than whatever debt you are paying off.
- Make smart moves. With any big-ticket acquisitions, the 0% APR strategy works well as long as you make sure you can afford it.
You can raise your credit score by making smart moves, which makes your future life easier with more access to easier credit. If qualification is a problem due to not having a credit history, a debt consolidation loan where you can build credit may be your solution. Most credit unions and banks will offer these services.
What Should I Look Out for When Consolidating Debt?
Any loan you take out to consolidate your debt will generally be quite helpful. But, you must always remember that there are a few risks:
- Can you afford it? If you cannot pay, do not take out the debt consolidation loan. Do not risk going delinquent on any payments. Instead, budget appropriately and plan ahead before sending out any applications. That way, you avoid getting burnt.
- Mind your fees: Origination and other fees are the first things you should check for because they are often the landmine hidden beneath low rates. In cases like these, you could end up paying more, so it is not worth it.
- Rates of interest: Always make sure the rate of the debt consolidation loan you take out is below whatever rate you have right now. If you do not, you are just wasting time and money. Never make any assumptions regarding rates, and always check APRs.
- Length: In the best-case scenario, you would be wrapping up paying both your current debt and the loan with which you consolidated it around the same time. Having your repayment terms be longer does lower the money you pay per month and makes it so you pay more overall. You want to be done with this as soon as you can, so do not stretch it beyond reason.
- Consistency: Since you are the one in charge of your money, you decide where it goes. The best-made plans will go belly up if you do not stick to them. So, do not get into any fresh debt until you are finished with this. If you do not, you may go bankrupt and get a summons to court.
The best way to make sure this does not happen to you is to read up on anything and everything you can. Additionally, always read the small lettering on the contracts and stick to your plan of action.
Is Taking Out a Loan the Right Move for Me?
Make the calculation. By this, we mean you should know exactly how much you pay monthly. You should also calculate how much you would pay per month and the total sum with fees included.
If your goal is to save as much money as possible, debt consolidation loans are a good idea. Even if you do not come out with a net profit, it may also help boost your credit score. So, always make sure to do so, and it is important to have the pros and cons of the different methods to give you a short breakdown.
Now, there are several pros and cons to different types of solutions. If you go for a balance transfer, you can expect a low introductory APR, as well as low minimum monthly payments. That way, you will not be subject to balance transfer fees.
This is mainly recommended for small to moderately-sized debts, but they typically require a good or better credit score. So, especially if you are dealing with credit card debt, this is an option you will want to consider.
If you have a larger debt and a poor credit score, a personal loan for debt may work better for you. They tend to have low regular APR and have fixed monthly payments, and they will often charge an origination fee. These work well if you have non-ideal credit for small to large debt consolidation. If you recognize yourself within this description, taking out a personal loan is something you should seriously consider as the best debt consolidation method.
Finally, there is the option of debt relief. If you have a large unsecured debt, this is the option you will want to consider. Often, if you are in this situation, your credit score will not be in a good spot.
Even if you have a very poor credit score, debt relief may offer a solution. They will negotiate with creditors on your behalf so you can get your debts settled, which includes having a portion of it forgiven. Debt relief works with standardized monthly payments.
It is in no way worth having your debt consolidated if, at the same time, you keep accruing more debt. If this is something you struggle with, you may want to seek contact with a credit counselor. These are professionals who are trained to help you make good financial decisions. So, if you have doubts regarding your ability to stick to your guns, do not hesitate to seek help, as you will be happy you did in the long run.
A lot of companies will also offer counseling services, and sometimes they will even mandate it. If this does happen, you are best off making sure you keep your relationship healthy with said companies by making timely payments. That way, getting your debt settled becomes a much less painful process.
Now, let us say you are so far down in the hole that your debts cannot possibly be consolidated through any loans. In this case, going bankrupt is a genuine concern, and bankruptcies can be seen on your reports for as long as a decade.
This is something you do not want because it will put your credit score right in the gutter. So, debt relief is probably your best option here. That way, you can make sure the actual payment process is streamlined and gives you a method to restore your credit score to a state where you once again have more financial freedom.
Conclusion: Even with Poor Credit, You Can Start Your Online Journey to Consolidate Your Debt
In our guide, we have gone through some online companies that will get you a surefire loan you can use to consolidate your debt. This means these companies promise to get you pre-qualified, which does not even affect your score. That way, you minimize any risks you would otherwise be taking. However, that does not mean your work is done simply by having read this guide, as there is always more you can do.
The data we have given you so far is a solid place to start, but always do further research on your own before signing anything. When appropriately utilized, taking out a debt consolidation loan can help you climb out of your financial hole. That way, you can raise your credit score to a point where you once again have access to the type of credit rates that are not likely to get you into the same bind again.