If you are juggling multiple credit card bills, paying 25% or 30% interest, and feeling like you’re getting nowhere, you are not alone. High-interest debt is a trap designed to keep you paying forever.
But there is a way out: Debt Consolidation Loans for Bad Credit.
Even with a low credit score, consolidating your debt into a single, fixed-rate loan can save you thousands of dollars in interest and help you become debt-free years sooner. In this guide, we’ll explain how these loans work and help you find the best lenders in 2026.
(If you need money fast for other emergencies, check our reviews of the top Personal Loans for Bad Credit).
How Debt Consolidation Loans Work
The concept is simple: you take out one large loan to pay off all your smaller, high-interest debts (like credit cards and medical bills).
Why do this?
One Payment: Instead of tracking 5 due dates, you have just one monthly bill.
Lower Interest: Personal loan rates are often lower than credit card APRs.
Fixed End Date: Credit cards can drag on for decades. A consolidation loan has a set term (e.g., 3 or 5 years).
Top Lenders for Debt Consolidation Loans for Bad Credit
Finding approval can be tricky, but these lenders specialize in looking beyond just your FICO score:
1. Upstart (Best for Thin Credit)
Upstart uses AI to look at your education and job history, not just your credit score. They are an excellent choice if your score is low simply because you don’t have much credit history.
2. Avant (Best for Scores 600-650)
Avant is a solid option for “fair” credit borrowers. They offer fast funding and flexible terms, though their interest rates can be higher than traditional banks.
3. OneMain Financial (Best for Secured Loans)
If your credit is very poor, OneMain Financial allows you to use your car as collateral (a secured loan). This can significantly increase your approval odds and lower your rate.
(Before applying, it helps to check your credit report for errors. See our guide on How to Boost Credit Score Fast).
Pros and Cons of Consolidating with Bad Credit
The Pros
Simplify Your Life: One payment is easier to manage than five.
Boost Credit Score: Paying off maxed-out credit cards lowers your “Credit Utilization Ratio,” which can boost your score by 30-50 points almost immediately.
Fixed Rates: Your rate won’t go up even if the market changes.
The Cons
Origination Fees: Many lenders charge a fee of 1% to 8% to process the loan.
High APRs: With bad credit, your rate might still be 18-30%.
The “Reloading” Trap: The biggest danger is paying off your credit cards and then running up the balances again.
How to Qualify in 5 Steps
Check Your Rate (Soft Pull): Most online lenders allow you to pre-qualify without hurting your credit score.
Calculate Savings: Ensure the new loan’s APR is lower than the weighted average of your credit cards.
Gather Documents: Have your ID, pay stubs, and a list of the debts you want to pay off ready.
Apply: Submit the formal application.
Pay Off Debt: Some lenders will send the money directly to your creditors for you.
Frequently Asked Questions
Does debt consolidation hurt my credit? Initially, you might see a small drop (5-10 points) due to the hard inquiry. However, because you are paying off revolving credit card debt, your score usually rebounds and increases significantly within 30-60 days.
Can I get a consolidation loan with a 500 credit score? It is difficult but possible. You may need to look at secured loans (like OneMain Financial) or get a co-signer. Alternatively, focus on boosting your credit score first.
What is the difference between debt consolidation and debt settlement? Huge difference. Consolidation means you pay off everything you owe, just with a new loan. Settlement means you stop paying and negotiate to pay less than you owe—this destroys your credit score for 7 years. Always choose Debt Consolidation Loans for Bad Credit if you can.
Conclusion
Getting approved for Debt Consolidation Loans for Bad Credit is a smart financial move if you are disciplined. It stops the bleeding from high credit card interest and puts you on a clear path to becoming debt-free.
Don’t let the interest pile up. Check your rates today and take control of your financial future.
