Best Debt Consolidation Loans of August 2024 - NerdWallet (2024)

Best Debt Consolidation Loans of August 2024

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SoFi Personal Loan

Best for Good credit

5.0

Rate discount

Est. APR

8.99-29.99%

Loan amount

$5K-$100K

Min. credit score

None

Visit Lenderon SoFi's website

on SoFi's website

Check Rateon NerdWallet

on NerdWallet

Key Facts:

Qualified borrowers will find few lenders better than SoFi, thanks to thoughtful perks like unemployment protection and free financial advising.

Qualifications:

  • Must legally be an adult in your state.
  • Must be a U.S. citizen, permanent resident or non-permanent resident with valid documentation.
  • Must be employed, have sufficient income or have an offer of employment to start within 90 days.

Available Term Lengths:2 to 7 years

Fees:

  • Origination fee: 0% to 7%.
  • Late fee: None.

2024 Best Personal Loan for

Debt Consolidation

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Upgrade

Best for Best overall

5.0

Rate discount

Est. APR

8.49-35.99%

Loan amount

$1K-$50K

Min. credit score

560

Visit Lenderon Upgrade's website

on Upgrade's website

Check Rateon NerdWallet

on NerdWallet

Key Facts:

Upgrade personal loans come with multiple rate discounts and offer direct payment to creditors. This lender has a low minimum credit score requirement, making the perks stand out even more.

Qualifications:

  • Minimum credit score: 560.
  • Minimum number of accounts on credit history: One account.
  • Maximum debt-to-income ratio: 75%, including the loan you're applying for.
  • Minimum length of credit history: Two years.
  • Minimum income requirement: None. Lender accepts income from alimony, retirement, child support, Social Security and other sources.

Available Term Lengths:3 to 7 years

Fees:

  • Origination fee: 1.85% to 9.99%.
  • Late Fee: $10.
  • Failed payment fee: $10.

LightStream

Best for Low rates

4.5

Rate discount

Est. APR

6.99-25.49%

Loan amount

$5K-$100K

Min. credit score

660

Visit Lenderon LightStream's website

on LightStream's website

Check Rateon NerdWallet

on NerdWallet

Key Facts:

LightStream is a solid option for good-credit borrowers, with no fees and low rates that vary based on loan purpose.

Qualifications:

  • Must be a U.S. citizen or permanent resident.
  • Must be at least 18 years old.
  • Minimum credit score: 660.
  • Must have several years of credit history with multiple account types and few or no delinquencies.
  • Must have assets like retirement, investment and savings accounts.

Available Term Lengths:2 to 7 years

Fees:

  • Origination fee: None.
  • Late fee: None.

Happy Money

Best for Paying off credit card debt

4.5

Fast funding

Est. APR

11.72-17.99%

Loan amount

$5K-$40K

Min. credit score

640

Visit Lenderon Happy Money's website

on Happy Money's website

Check Rateon NerdWallet

on NerdWallet

Key Facts:

If you qualify for a low rate, Happy Money is a smart way to consolidate high-interest credit card debt into one fixed monthly payment.

Qualifications:

  • Must be a U.S. citizen or permanent resident.
  • Must have a valid Social Security number.
  • Minimum credit score: 640.
  • Minimum credit history: 6 years and 2 accounts.
  • Maximum debt-to-income ratio: 55%.
  • No bankruptcies filed in past two years.

Available Term Lengths:2 to 5 years

Fees:

  • Origination fee: 1.5% to 5%.

Achieve Personal Loans

Best for Rate discounts

4.5

Rate discount

Est. APR

8.99-35.99%

Loan amount

$5K-$50K

Min. credit score

620

Visit Lenderon Achieve's website

on Achieve's website

Check Rateon NerdWallet

on NerdWallet

Key Facts:

Achieve personal loans can be a good debt consolidation option for fair- or good-credit borrowers who qualify for one of the lender’s rate discounts.

Qualifications:

  • Minimum credit score: 620.
  • Maximum debt-to-income ratio: 70% including a mortgage payment or other housing expense.
  • Minimum income: None.
  • Minimum credit history: 3 years across 2 accounts.
  • Must be a U.S. citizen or permanent resident living in a state where Achieve operates.
  • Must provide a Social Security number or ITIN.

Available Term Lengths:2 to 5 years

Fees:

  • Origination fee: 1.99% - 6.99%.
  • Late fee: $8.

Best Egg

Best for Secured loan option

4.5

Secured loans

Wide range of loan amounts

Est. APR

8.99-35.99%

Loan amount

$2K-$50K

Min. credit score

600

Visit Lenderon Best Egg's website

on Best Egg's website

Check Rateon NerdWallet

on NerdWallet

Key Facts:

Best Egg is worth considering for borrowers looking for a secured loan or to consolidate debt, but the loans come with an origination fee.

Qualifications:

  • Minimum credit score: 600.
  • Must be a U.S. citizen.
  • Minimum credit history: 24 months and 1 account.
  • Minimum annual income: $3,500.
  • Maximum debt-to-income ratio: 40% or 65% including mortgage.

Available Term Lengths:3 to 5 years

Fees:

  • Origination fee: 0.99% - 9.99%.

Universal Credit

Best for Bad credit

4.0

Fast funding

Rate discount

Est. APR

11.69-35.99%

Loan amount

$1K-$50K

Min. credit score

560

Check Rateon NerdWallet

on NerdWallet

Key Facts:

A Universal Credit loan is a sound option for bad-credit borrowers looking to build credit, but rates are high compared to similar lenders.

Qualifications:

  • Minimum credit score: 560.
  • Minimum number of accounts on credit history: 1 account.
  • Maximum debt-to-income ratio: 75%, including mortgage and the loan you’re applying for.
  • Minimum length of credit history: 2 years.
  • Minimum income requirement: None. Lender accepts income from alimony, retirement, child support, Social Security and other sources.

Available Term Lengths:3 to 5 years

Fees:

  • Origination fee: 5.25% to 9.99%.
  • Late fee: Up to $10.
  • Non-sufficient funds fee: $10.

LendingClub

Best for Joint loan option

4.5

Flexible payments

Est. APR

8.98-35.99%

Loan amount

$1K-$40K

Min. credit score

600

Check Rateon NerdWallet

on NerdWallet

Key Facts:

LendingClub personal loans are a solid option for good-credit borrowers looking to consolidate debt and build their credit.

Qualifications:

  • Minimum credit score: 600; average borrower score is above 700.
  • Minimum income: None; lender requires proof of income. Borrower average is $100,000 per year.
  • Maximum DTI: 40%.
  • Minimum credit history: 36 months and two accounts.

Available Term Lengths:2 to 5 years

Fees:

  • Origination fee: 3% to 8%.
  • Late fee: 5% of payment or $15 after 15-day grace period.

🏆Top 3 most visited

🏆Top 3 most visited

Discover® Personal Loans

Best for Fast funding

5.0

Fast funding

Est. APR

7.99-24.99%

Loan amount

$2.5K-$40K

Min. credit score

660

Visit Lenderon Discover's website

on Discover's website

Check Rateon NerdWallet

on NerdWallet

Key Facts:

With competitive rates and no origination fees, Discover personal loans are good options for borrowers with good and excellent credit.

Qualifications:

  • Minimum credit score: 660.
  • Must be at least 18 years old.
  • Must have a valid U.S. Social Security number.
  • Minimum individual or household annual income of $25,000.
  • Must have an active email address.

Available Term Lengths:3 to 7 years

Fees:

  • Origination fee: None.
  • Late fee: $39.

PNC Bank Personal Loan

Best for Bank loans

4.5

Est. APR

7.49-30.49%

Loan amount

$1K-$35K

Min. credit score

None

Check Rateon NerdWallet

on NerdWallet

Key Facts:

For borrowers who want flexibility, PNC delivers with a wide range of repayment terms and a joint loan option, but non-customers may need to visit a branch to close the loan.

Qualifications:

  • Minimum credit score: None.
  • Must be at least 18 years old.
  • Must provide date of birth and Social Security number.
  • Must show photo ID.
  • Must be able to show proof of income.

Available Term Lengths:6 months to 5 years

Fees:

  • Origination fee: None.
  • Late fee: Greater of $40 or 10% of amount due, after 15-day grace period.

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SoFi Personal Loan

5.0

Best for Good credit

+ 6,900recent visits

Est. APR

8.99-29.99%

Loan amount

$5K-$100K

Min. credit score

None

Best for Good credit

Rate discount

Visit Lenderon SoFi's website

on SoFi's website

Check Rateon NerdWallet

on NerdWallet

Key Facts:

Qualified borrowers will find few lenders better than SoFi, thanks to thoughtful perks like unemployment protection and free financial advising.

Qualifications:

  • Must legally be an adult in your state.
  • Must be a U.S. citizen, permanent resident or non-permanent resident with valid documentation.
  • Must be employed, have sufficient income or have an offer of employment to start within 90 days.

Available Term Lengths:2 to 7 years

Fees:

  • Origination fee: 0% to 7%.
  • Late fee: None.

2024 Best Personal Loan forDebt Consolidation

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Upgrade

5.0

Best for Best overall

+ 2,500recent visits

Est. APR

8.49-35.99%

Loan amount

$1K-$50K

Min. credit score

560

Best for Best overall

Rate discount

Visit Lenderon Upgrade's website

on Upgrade's website

Check Rateon NerdWallet

on NerdWallet

Key Facts:

Upgrade personal loans come with multiple rate discounts and offer direct payment to creditors. This lender has a low minimum credit score requirement, making the perks stand out even more.

Qualifications:

  • Minimum credit score: 560.
  • Minimum number of accounts on credit history: One account.
  • Maximum debt-to-income ratio: 75%, including the loan you're applying for.
  • Minimum length of credit history: Two years.
  • Minimum income requirement: None. Lender accepts income from alimony, retirement, child support, Social Security and other sources.

Available Term Lengths:3 to 7 years

Fees:

  • Origination fee: 1.85% to 9.99%.
  • Late Fee: $10.
  • Failed payment fee: $10.

LightStream

4.5

Best for Low rates

Est. APR

6.99-25.49%

Loan amount

$5K-$100K

Min. credit score

660

Best for Low rates

Rate discount

Visit Lenderon LightStream's website

on LightStream's website

Check Rateon NerdWallet

on NerdWallet

Key Facts:

LightStream is a solid option for good-credit borrowers, with no fees and low rates that vary based on loan purpose.

Qualifications:

  • Must be a U.S. citizen or permanent resident.
  • Must be at least 18 years old.
  • Minimum credit score: 660.
  • Must have several years of credit history with multiple account types and few or no delinquencies.
  • Must have assets like retirement, investment and savings accounts.

Available Term Lengths:2 to 7 years

Fees:

  • Origination fee: None.
  • Late fee: None.

Happy Money

4.5

Best for Paying off credit card debt

Est. APR

11.72-17.99%

Loan amount

$5K-$40K

Min. credit score

640

Best for Paying off credit card debt

Fast funding

Visit Lenderon Happy Money's website

on Happy Money's website

Check Rateon NerdWallet

on NerdWallet

Key Facts:

If you qualify for a low rate, Happy Money is a smart way to consolidate high-interest credit card debt into one fixed monthly payment.

Qualifications:

  • Must be a U.S. citizen or permanent resident.
  • Must have a valid Social Security number.
  • Minimum credit score: 640.
  • Minimum credit history: 6 years and 2 accounts.
  • Maximum debt-to-income ratio: 55%.
  • No bankruptcies filed in past two years.

Available Term Lengths:2 to 5 years

Fees:

  • Origination fee: 1.5% to 5%.

Achieve Personal Loans

4.5

Best for Rate discounts

Est. APR

8.99-35.99%

Loan amount

$5K-$50K

Min. credit score

620

Best for Rate discounts

Rate discount

Visit Lenderon Achieve's website

on Achieve's website

Check Rateon NerdWallet

on NerdWallet

Key Facts:

Achieve personal loans can be a good debt consolidation option for fair- or good-credit borrowers who qualify for one of the lender’s rate discounts.

Qualifications:

  • Minimum credit score: 620.
  • Maximum debt-to-income ratio: 70% including a mortgage payment or other housing expense.
  • Minimum income: None.
  • Minimum credit history: 3 years across 2 accounts.
  • Must be a U.S. citizen or permanent resident living in a state where Achieve operates.
  • Must provide a Social Security number or ITIN.

Available Term Lengths:2 to 5 years

Fees:

  • Origination fee: 1.99% - 6.99%.
  • Late fee: $8.

Best Egg

4.5

Best for Secured loan option

Est. APR

8.99-35.99%

Loan amount

$2K-$50K

Min. credit score

600

Best for Secured loan option

Secured loans

Wide range of loan amounts

Visit Lenderon Best Egg's website

on Best Egg's website

Check Rateon NerdWallet

on NerdWallet

Key Facts:

Best Egg is worth considering for borrowers looking for a secured loan or to consolidate debt, but the loans come with an origination fee.

Qualifications:

  • Minimum credit score: 600.
  • Must be a U.S. citizen.
  • Minimum credit history: 24 months and 1 account.
  • Minimum annual income: $3,500.
  • Maximum debt-to-income ratio: 40% or 65% including mortgage.

Available Term Lengths:3 to 5 years

Fees:

  • Origination fee: 0.99% - 9.99%.

Universal Credit

4.0

Best for Bad credit

Est. APR

11.69-35.99%

Loan amount

$1K-$50K

Min. credit score

560

Best for Bad credit

Fast funding

Rate discount

Check Rateon NerdWallet

on NerdWallet

Key Facts:

A Universal Credit loan is a sound option for bad-credit borrowers looking to build credit, but rates are high compared to similar lenders.

Qualifications:

  • Minimum credit score: 560.
  • Minimum number of accounts on credit history: 1 account.
  • Maximum debt-to-income ratio: 75%, including mortgage and the loan you’re applying for.
  • Minimum length of credit history: 2 years.
  • Minimum income requirement: None. Lender accepts income from alimony, retirement, child support, Social Security and other sources.

Available Term Lengths:3 to 5 years

Fees:

  • Origination fee: 5.25% to 9.99%.
  • Late fee: Up to $10.
  • Non-sufficient funds fee: $10.

LendingClub

4.5

Best for Joint loan option

Est. APR

8.98-35.99%

Loan amount

$1K-$40K

Min. credit score

600

Best for Joint loan option

Flexible payments

Check Rateon NerdWallet

on NerdWallet

Key Facts:

LendingClub personal loans are a solid option for good-credit borrowers looking to consolidate debt and build their credit.

Qualifications:

  • Minimum credit score: 600; average borrower score is above 700.
  • Minimum income: None; lender requires proof of income. Borrower average is $100,000 per year.
  • Maximum DTI: 40%.
  • Minimum credit history: 36 months and two accounts.

Available Term Lengths:2 to 5 years

Fees:

  • Origination fee: 3% to 8%.
  • Late fee: 5% of payment or $15 after 15-day grace period.

🏆Top 3 most visited

Discover® Personal Loans

5.0

Best for Fast funding

🏆Top 3 most visited

Est. APR

7.99-24.99%

Loan amount

$2.5K-$40K

Min. credit score

660

Best for Fast funding

Fast funding

Visit Lenderon Discover's website

on Discover's website

Check Rateon NerdWallet

on NerdWallet

Key Facts:

With competitive rates and no origination fees, Discover personal loans are good options for borrowers with good and excellent credit.

Qualifications:

  • Minimum credit score: 660.
  • Must be at least 18 years old.
  • Must have a valid U.S. Social Security number.
  • Minimum individual or household annual income of $25,000.
  • Must have an active email address.

Available Term Lengths:3 to 7 years

Fees:

  • Origination fee: None.
  • Late fee: $39.

PNC Bank Personal Loan

4.5

Best for Bank loans

Est. APR

7.49-30.49%

Loan amount

$1K-$35K

Min. credit score

None

Best for Bank loans

Check Rateon NerdWallet

on NerdWallet

Key Facts:

For borrowers who want flexibility, PNC delivers with a wide range of repayment terms and a joint loan option, but non-customers may need to visit a branch to close the loan.

Qualifications:

  • Minimum credit score: None.
  • Must be at least 18 years old.
  • Must provide date of birth and Social Security number.
  • Must show photo ID.
  • Must be able to show proof of income.

Available Term Lengths:6 months to 5 years

Fees:

  • Origination fee: None.
  • Late fee: Greater of $40 or 10% of amount due, after 15-day grace period.

NerdWallet’s guide to debt consolidation loans

Learn how debt consolidation loans work, the pros and cons of consolidating your debt and how to get a debt consolidation loan.

  • What are debt consolidation loans and how do they work?

  • Are debt consolidation loans a good idea?

  • How to compare personal loans for debt consolidation

  • How to get a debt consolidation loan

  • Does getting a debt consolidation loan hurt your credit?

  • Tips for getting approved for a debt consolidation loan

  • What to know about debt consolidation loans for bad credit

  • Alternatives to debt consolidation loans

  • Frequently asked questions about debt consolidation

What are debt consolidation loans and how do they work?

Debt consolidation loans are a type of personal loan that combine multiple unsecured debts — such as credit cards, medical bills and payday loans — into one fixed monthly payment, making it easier to get out of debt.

As long as the interest rate on the debt consolidation loan is lower than the average rate of your existing debts, you’ll save money on interest and potentially pay off your debt faster.

Online lenders, banks and credit unions offer debt consolidation loans. Once you’re approved, the lender deposits the loan into your bank account, and you use that money to pay off your debts, so you’re left with only the new loan. Some lenders even pay off your creditors for you.

You then make monthly payments toward the debt consolidation loan until all your debt is paid off. Payments are fixed for the life of the loan, typically two to seven years.

» MORE: How do debt consolidation loans work?

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Ask NerdWallet: Should I use a debt consolidation loan to pay off my credit card debt?

“Consolidating credit card debt is usually a smart move, because credit cards have really high interest rates, and when you carry a balance, you end up paying interest on interest. A debt consolidation loan has a fixed interest rate, so it stops the cycle of compounding interest, and rates tend to be lower.

It also gives you a plan. If you’ve only been able to make the minimum payments on your credit cards each month, you probably aren’t making much progress on your debt. A consolidation loan has a clear endpoint, as long as you make the monthly payments on time.”

Best Debt Consolidation Loans of August 2024 - NerdWallet (21)

Jackie Veling, Lead Writer on Debt Consolidation

Are debt consolidation loans a good idea?

Debt consolidation loans are a good idea if you can get a lower annual percentage rate than what you're currently paying on your other debts. The best debt consolidation loan interest rates are reserved for borrowers with good or excellent credit (690 or higher credit score).

Like with all financial decisions, you should carefully weigh the pros and cons of consolidating your debts before you apply for a loan. Here are the main benefits and drawbacks of debt consolidation loans to help you make an informed decision.

Pros

  • You pay less in interest.
  • You may get out of debt faster.
  • You have only one payment.
  • You have a clear finish line.

Cons

  • You may not qualify for a low enough rate.
  • You still have debt you need to manage.
  • Consolidation won’t fix core spending issues.

Pros of debt consolidation loans

  • You pay less in interest: By getting a debt consolidation loan at a lower rate than your current debts, you’ll save money on interest, which can make your debt more manageable.

  • You may get out of debt faster: Because you’re saving money on interest, you can use that savings to make larger payments on your loan and get out of debt even faster.

  • You have only one payment: Unlike juggling multiple credit card bills, you’ll have only one monthly payment if you combine your debts under a consolidation loan.

  • You have a clear finish line: A debt consolidation loan gives you an exact date you’ll be debt-free, which can help you stay motivated as you make the payments.

Cons of debt consolidation loans

  • You may not qualify for a low enough rate: Not all consolidation loans come with low interest rates, and if you have bad credit (a score below 630), you may not get a rate that’s lower than your current debts.

  • You still have debt you need to manage: Consolidating debt is a smart choice for many, but it’s important to remember the debt doesn’t disappear — it goes somewhere else. Most debt consolidation loans offer terms of two to seven years, so be prepared to stick to your monthly payments over that time period.

  • Consolidation won’t fix core spending issues: If you’re in debt because you struggle to stick to your monthly budget, a debt consolidation loan won’t fix that. It may even make things worse if you use your newly freed credit cards to rack up additional debt.

^ Back to table of contents

Debt consolidation loan interest rates

The interest rate you get on a debt consolidation loan depends on factors like your credit score and debt-to-income ratio, which is the percentage of your monthly income that goes to debt payments. Though rates vary, borrowers with good to excellent credit scores tend to get the lowest interest rates on debt consolidation loans.

The average consolidation loan interest rate for consumers with good credit (690 to 719 credit score) is currently 12.70%, according to aggregate, anonymized offer data from users who pre-qualified for a personal loan through NerdWallet. See the table below to get an idea of what rate you can expect.

Average debt consolidation loan interest rates

Borrower credit rating

Score range

Estimated APR

Excellent

720-850.

9.78%.

Good

690-719.

12.70%.

Fair

630-689.

16.62%.

Bad

300-629.

21.35%.

Source: Average rates are based on aggregate, anonymized offer data from users who pre-qualified through NerdWallet from June 1, 2024, through June 30, 2024, and chose credit card consolidation or debt consolidation as their loan purpose. Rates are estimates only and not specific to any lender. The lowest credit scores — usually below 500 — are unlikely to qualify. Information in this table applies only to lenders with maximum APRs below 36%.

^ Back to table of contents

How to compare personal loans for debt consolidation

Check that the available loan amounts and terms match your debt: Personal loans for debt consolidation loans come in a wide range of loan amounts ($1,000 to $50,000) and repayments terms (two to seven years). Look for a lender whose loan product meets your debt payoff needs.

Look for an annual percentage rate lower than your existing debts: The loan's annual percentage rate, or APR, represents its true annual cost and includes interest and any fees. Choose a low rate with monthly payments that fit your budget.

Avoid origination fees if you can: Some lenders charge origination fees to cover the cost of processing your loan. This one-time fee typically ranges from 1% to 10% of the loan amount and is deducted from your loan proceeds or added to the loan balance.

Avoid loans that include this fee to keep costs down, unless the APR (which includes the origination fee) is still lower than loans with no origination fee.

Look for special debt consolidation features: Some lenders offer consumer-friendly features like direct payment to creditors, which means the lender pays off your debts once your loan closes, saving you that task. Other lenders may offer free credit score monitoring.

^ Back to table of contents

How to get a debt consolidation loan

1. Add up current debts and calculate the combined interest rate

The first step in getting a debt consolidation loan is having a clear picture of your current debt. You can use NerdWallet’s debt consolidation calculator to see your total balance, total monthly payment and combined interest rate across all debts.

Keep two numbers in mind moving forward: Your total debt, because this is the loan amount you need to apply for, and your combined interest rate, because you’ll want a lower interest rate on your consolidation loan.

2. Pre-qualify and compare loan options

One of the best ways to compare loan offers is to pre-qualify with multiple lenders, which lets you see your potential loan terms, including APR, without any effect on your credit score. Though not all banks or credit unions offer pre-qualification, most online lenders do.

» MORE: Pre-qualify for free on NerdWallet

3. Apply for a debt consolidation loan

Once you’ve decided on a lender, it’s time to apply for the loan.

Most loan applications are online and ask you to supply personal information like your Social Security number, address and other contact details. You also may be asked to provide proof of identity, employment and income.

Once you’ve submitted your application, the lender will make an approval decision. If you’re approved, you’ll sign the loan agreement and receive the funds. Funding time varies among lenders, but some lenders can fund the same day you’re approved.

4. Pay off creditors

Here’s the most important step: Use the loan proceeds to pay off your existing debts. Some lenders send the funds to your creditors for you, so you’ll need to provide account information about your existing debts — and check the accounts to make sure they’re paid off.

If a lender doesn’t offer direct payment, they’ll deposit the funds in an account of your choosing or mail a check, if you prefer. It’ll be up to you to make sure the right amount goes to each debt.

5. Begin making payments on your new loan

Once your existing debts are paid, you’re left with your new loan. Personal loan payments are monthly, though there’s usually no fee for paying off a loan early. Make a plan now to manage your personal loan payments.

As you make progress on paying off your loan, try to keep your credit card balances at or near zero until you’re debt-free. But avoid closing the accounts, which can lower your credit score.

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Does getting a debt consolidation loan hurt your credit?

Debt consolidation loans can affect your credit score.

Applying for a loan requires a hard credit check, which can temporarily ding your credit score by a few points. And if you turn around and rack up new credit card debt, your credit score will suffer.

Making late payments on your new loan can also hurt your credit score.

However, if you use the debt consolidation loan to pay off your debts and then pay off the new loan on time, the overall effect on your credit should be positive. That’s because you’ve lowered your credit utilization, which measures how much of your credit limit is tied up. Lowering your credit utilization helps your credit.

» MORE: Does debt consolidation hurt your credit?

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3 tips for getting approved for a debt consolidation loan

Best Debt Consolidation Loans of August 2024 - NerdWallet (22)

1. Focus on quick wins for your credit

Start by paying down any small debts if you can. This lowers your debt-to-income ratio, which could help quickly build your score. You can also check your credit report for errors and file a dispute.

Best Debt Consolidation Loans of August 2024 - NerdWallet (23)

2. Consider a co-signed or joint loan

Adding a co-borrower to your application, especially if that person has a better credit score than you, could improve your chances of getting approved. Co-borrowers are on the hook for repayment.

Best Debt Consolidation Loans of August 2024 - NerdWallet (24)

3. Tie collateral to the loan application

Applying for a secured loan, in which you pledge collateral like your car or savings account to help guarantee the loan, is another way to boost your application. But if you fail to repay the loan, the lender can seize the collateral.

» MORE: How to boost your chances of loan approval

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What to know about debt consolidation loans for bad credit

You can still get a debt consolidation loan if you have bad credit (a 629 credit score or lower).

Look specifically for lenders that let you pre-qualify with a soft credit check — that way you can check if you meet the lender’s requirements without taking a hit to your credit score. This will also help you check if the rate you qualify for is lower than your existing debts.

Some online lenders specifically offer debt consolidation loans for borrowers with bad credit. If you’re not sure where to begin, your local credit union is also a good first stop.

» MORE: How to get a debt consolidation loan with bad credit

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Other ways to get out of debt

A debt consolidation loan isn’t your only option for paying off debt.

0% balance transfer credit card

For borrowers with good to excellent credit, transferring debts to a 0% balance transfer card is a great option — as long as you can pay it off during the introductory period, which can last up to 21 months.

This is sometimes called credit card refinancing, and it's similar to a consolidation loan. But because you pay no interest during the introductory period, you can get out of debt even faster.

🤓

Nerdy Tip

Balance transfers work best if you can qualify for a card that covers the amount of your debt, and the savings in interest outweigh the balance transfer fee, which is typically 3% to 5% of the total amount transferred. Aim to pay off the balance in full before the zero-interest promotion expires and the APR resets to its normal, higher rate.

» MORE: Best balance transfer credit cards

Credit counseling

Nonprofit organizations offer credit counseling, which includes helping you create a debt management plan. Similar to other consolidation products, these plans roll your debts into one manageable payment at a reduced interest rate.

» MORE: Find the right debt management plan

DIY debt payoff strategies

If you’re not sure how to tackle debt, you may not need to consolidate. The debt snowball and debt avalanche methods are two common and effective strategies for paying off debt.

The snowball method focuses on paying off your smallest debt first, building momentum as you go. The avalanche focuses on paying off the debt with the highest interest rate first, then applying the savings elsewhere. Both can boost your payoff speed.

Debt relief

If you have significant debt (40% or more of your income) and no plan to pay it off, you may want to explore other strategies, like debt settlement or bankruptcy. Both of these options help eliminate unsecured debts, but they hurt your credit and are typically a last resort.

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Frequently asked questions about debt consolidation

  • Debt consolidation is a good reason to get a loan, as long as you use the loan to successfully pay off your debts at a lower rate, make on-time payments to your new loan and safely manage debt in the future. Use a debt consolidation calculator to see what you can save.

  • You can apply for most debt consolidation loans online, including loans from banks and credit unions. A loan application will ask for details about the loan you want, your personal and contact information, and information about your income and any debts. It may require additional documentation, like proof of identity and proof of income.

  • The minimum credit score for a debt consolidation loan varies by lender. Bad-credit lenders may accept borrowers with credit scores of 629 or less.

  • To qualify you for debt consolidation, a lender typically looks at your credit score, credit history, income and any existing debts. There are ways to boost your chances of getting approved for a loan, like building your credit and paying off small debts.

  • You can still use your credit cards after debt consolidation. Consolidating your debts doesn’t close your credit cards, it just pays them off, but be careful about increasing your overall credit utilization and ending up in more debt than before.

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Last updated on August 1, 2024

Methodology

NerdWallet’s review process evaluates and rates personal loan products from more than 35 technology companies and financial institutions. We collect over 50 data points from each lender and cross-check company websites, earnings reports and other public documents to confirm product details. We may also go through a lender’s pre-qualification flow and follow up with company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.

Our star ratings award points to lenders that offer consumer-friendly features, including: soft credit checks to pre-qualify, competitive interest rates and no fees, transparency of rates and terms, flexible payment options, fast funding times, accessible customer service, reporting of payments to credit bureaus and financial education. Our ratings award fewer points to lenders with practices that may make a loan difficult to repay on time, such as charging high annual percentage rates (above 36%), underwriting that does not adequately assess consumers’ ability to repay and lack of credit-building help. We also consider regulatory actions filed by agencies like the Consumer Financial Protection Bureau. We weigh these factors based on our assessment of which are the most important to consumers and how meaningfully they impact consumers’ experiences.

NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodologies for personal loans and our editorial guidelines.

To recap our selections...

NerdWallet's Best Debt Consolidation Loans of August 2024

  • SoFi Personal Loan: Best for Good credit
  • Upgrade: Best for Best overall
  • LightStream: Best for Low rates
  • Happy Money: Best for Paying off credit card debt
  • Achieve Personal Loans: Best for Rate discounts
  • Best Egg: Best for Secured loan option
  • Universal Credit: Best for Bad credit
  • LendingClub: Best for Joint loan option
  • Discover® Personal Loans: Best for Fast funding
  • PNC Bank Personal Loan: Best for Bank loans
Best Debt Consolidation Loans of August 2024 - NerdWallet (2024)
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