Credit card debt in the United States has grown to$1.14 trillion in 2024.
Additionally, the average interest rate for a credit card has now reached27.8%.
You also cant forget that many households are balancing mortgages, auto loans and student loan debt.
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With so many individual payments, its no wonder some people miss or accidentally skip them.
A debt consolidation loan could help.
Drowning in Expenses?
Maybe youre scrambling after your car broke down.
Or you got a medical bill you werent expecting.
Or inflation has finally pushed your budget over the edge.
You dont need to go it alone.
When money is tight,these resourcescan help you manage unexpected expenses without stress.
What Is a Debt Consolidation Loan?
This, ideally, also comes with a lower annual percentage rate (APR).
Unliked credit cards, which operate with revolving credit, debt consolidation loans are designed as installment loans.
So whats the difference?
Revolving Credit
Credit cards give borrowers a set amount of money to borrow, usually each month.
You dont have to pay off your credit card balance in full in any given month.
However, you will be charged interest on that debt, which increases what you owe.
Then you have to make a payment (an installment) each month until that loan is paid off.
For personal loans, that monthly amount typically does not change over the life of the loan.
Like a rent or mortgage payment, you must pay the installment in full each month.
If you miss a payment, you could default on the loan.
But what if your score is lower?
This encompasses both fair credit (580 to 669) and poor credit (300 to 579).
you might find some loans even with a lower credit score (more on that below).
Just be prepared for a higher interest rate and limit on how much you might borrow.
Lenders typically advertise personal loan APRs as a range.
Bad credit borrowers should expect their interest rate to fall on the higher end.
You may also have to accept smaller loans.
If thats the case, prioritize paying off debts with high interest rates first.
You should also have enough money for fees.
Most lenders charge an origination fee upfront.
If you dont have the cash to cover an origination fee, you may struggle to get a loan.
Here are a few places to look for debt consolidation loans for bad credit.
You should be able to have an informal conversation without impacting your credit score.
They can let you know what rates and terms you may qualify for.
If you bank exclusively online, most online financial institutions offer personal loans.
We recommend sticking with lenders with strong ratings on sites like Better Business Bureau and TrustPilot.
Upstartis the best overall fair credit loan.
We also like the small loan amounts and next-day funding offered by Upstart.
Like Upstart,Upgradecaters to all bad credit borrowers, not just those with fair credit.
Upgrade considers credit scores as low as 560 and promises next-day funding.
you’re able to get a loan as small as $1,000 through Upgrade.
Rocket Loanscan do same-day funding, but the minimum credit score requirement is on the higher end: 640.
We like that APRs top out under 30%, too.
Discoverdoesnt charge an origination fee.
Discover does not disclose its minimum credit score requirement.
It does consider annual income and DTI when making its decisions.
With a minimum credit score requirement of just 600,LendingClubis one of the more attainable debt consolidation loans.
Best Eggcontinues to impress because of its great customer satisfaction scores.
No origination fees and a low max APR (18%) make debt consolidation loans fromNavy Federalappealing.
You must be a member of the credit union, and you cant get pre-qualified.
That means your credit score will take a hit when you seek approval.
Avanthas one of the lowest minimum credit score requirements (580) and can promise next-day funding.
LendingPointalso has a 580 credit score requirement and an easy system process.
Pros of Debt Consolidation Loans
Late fees are no joke.
When you first apply for a debt consolidation loan, your credit score may drop a few points.
Just avoid predatory credit cards in the future to keep your credit score healthy.
It can also reduce your monthly payment and cut down on interest.
But it wont solve your debt problem youll still need to pay what you owe.
When you take out a loan, there are origination fees.
Those can add up.
When you take out a loan, it does negatively impact your credit.
We Dare You to Take Control of Your Debt
Up for a debt challenge?
In 10 days,these 10 practical stepscould help you get back on the right financial track.
Most lenders now let borrowers pre-qualify without impacting their credit scores.
To do so, provide accurate information about your income, outstanding debts and credit history.
you’re able to get pre-qualified with as many lenders as you would like.
Doing so will generally get you a lower interest rate and improve your chances of being approved.
Finding a co-signer can be difficult because that person takes on equal responsibility for the debt consolidation loan.
As the borrower, you are risking someone elses finances on top of your own.
If you dont receive any offers, start considering debt consolidation loan alternatives.
Its still a credit card, which comes with some inherent risks.
Explore if abalance transfer cardmakes sense for you.
Home Equity Loan
If you are a homeowner, you have another option.
Credit Counseling
Though some credit counselors offer limited services free of charge, most require a fee.
As part of their services, some counselors may help you set up a DMP.
However, you have to pay for these services (which arent guaranteed to work).
Bankruptcy
Filing for bankruptcycomes with serious consequences and should be your absolute last resort.
It will get you out ofmostdebt, but not all debt.
Moststudent loansare immune to bankruptcy, for example.
However, bankruptcy can give you a chance at a fresh start.
Need Some Quick Cash?
If youre looking to boost your income this month, weve got just the thing for you.
