5 Best Debt Consolidation Loans For Bad Credit in 2021 (Personal Loans)


Debts are part of our day-to-day life and we all deal with them. And from time to time most people struggle with paying their debts in due time or even covering them. That’s why having a sound understanding of your options to manage debts is paramount. Debt consolidation loans, among others, are such an option.

#1 Debt Consolidation Loan in 2021 – Viva Payday Loans


Best Debt Consolidation Loans – Quick Pick

  • SoFi – Best for Personal Loans For Debt Consolidation.
  • PayOff – Best Debt Consolidation Loans for Bad Credit
  • BestEgg – Guaranteed Debt Consolidation Loans Bad Credit
  • UpStart – Best for Poor Credit Loans For Debt Consolidation.
  • LightStream – Top Choice For Bad Credit Debt Consolidation Loans.

What Are Personal Loans For Debt Consolidation?

Debt consolidation is the process of merging several debts like credit cards, personal loans, student loans, payday loans, consumer debts, and other liabilities into one larger debt. The purpose of debt consolidation is to have more favorable paying terms like better interest rates and a more affordable monthly rate or both.

A debt consolidation loan is a type of personal loan that finances the process of debt consolidation and is used to pay off multiple existing debts.

In general, when applying for a debt consolidation loan, you take into consideration the amount of money you owe. When the loan is approved you get the funds and pay the existing debts that you want to cover and close. Sometimes the lender pays your creditors directly. And from now on you have to pay just the rate for the debt consolidation loan.

Usually, the debt consolidation loan is used for credit card debts as most often they have high rates. And are offered by banks, credit unions, and various online lenders.

Common Uses of Debt Consolidation Loans Bad Credit

Debt consolidation should be used only when it delivers obvious advantages. Most frequently the debt consolidation loans are used to:

  • Get out of debt sooner.
  • Reduce expenses with interest.
  • Simplifying financial operations by replacing several payments with one.
  • Strengthening your credit score.
  • Minimizing the installments to pay the overall debt.

A debt consolidation loan is not always in your best interest. It is not an option if after consolidation your interest rate increases, or if the total costs of the consolidation loan are higher than the benefits. Not to mention, if the final rate creates problems with the payments.

How to Qualify for Best Debt Consolidation Loans

Qualifying criteria for obtaining a debt consolidation loan differ from one lending company to another. But a minimal set of requirements usually includes:

  • Age – You should have at least 18 years.
  • S. citizenship or legal residency.
  • Not in bankruptcy or foreclosure.
  • A credit score higher than 600 points.
  • A debt to income ratio lower than 45%.

The debt to income (DTI) ratio represents the percentage of your income that is used to pay the debt each month.

A good credit score and a low DTI are the conditions that offer you the chance to qualify for the best interest rates and for larger loan levels.

Having a bad credit score still offers you the possibility to get a loan, but most probably you will pay higher interest rates. To improve your chances of obtaining better credit conditions you may consider bringing a co-signer that has a good credit score. But, remember that they will share the responsibility with you in case of problems with your monthly payments.

5 Best Debt Consolidation Loans – Fully Reviewed

1. SoFi – Overall Best Debt Consolidation Loans Bad Credit

SoFi is an online lender, established in 2011 that provides for its US clients fixed-rate personal loans, debt consolidation loans included. Actually, SoFi counts over 2 million members and has founded loans in sum of over $50 billion.

SoFi is well known for offering large loan amounts and extended loan terms provided that the credit scoring and revenue requirements are met. Loan amounts depend on the legal requirements present in your state. The interest rates depend on a series of factors among which is your creditworthiness.

To qualify for a loan with SoFi, you need to meet the following criteria:

  • Be legally considered an adult.
  • S. citizenship, residency, or visa holder.
  • Be employed, dispose of sufficient income from other sources, or have an employment offer.
Annual Percentage Rate (APR) range 4.99% to 18.13%  (includes 0.25% autopay discount)
Instant Prequalification Yes
Origination Fee, Annual Fee, Late Fee No
Term 3 – 7 years
Amount $5,000 – $100,000
Time to Receive Funds Usually the next day after approval
Minimum Credit Score 680
Rating 4.3


  • Very competitive APRs.
  • No origination fees, no late fees, and no prepayment penalties.
  • Lengthy terms and high loan amounts.
  • Direct payment to lenders.
  • Unemployment protection, your loan will be suspended until you find a new job and the company will help you to land a new job.
  • Mobile app to manage your loan easier.
  • Discount of 25% for choosing the autopay option.
  • Joint loan option.


  • Some applicants complain that the qualification requirements are high.
  • Secured loan option is not available.
  • Co-signer option not available.

SoFi is the best option for high-income earners equipped with a good credit score who look for a large loan for an extended period of time.

2. Payoff – Good for Personal Loans For Debt Consolidation

Launched in 2009, Payoff is an online lending platfrom that offers debt consolidation loans for credit cards in most American states except Mississippi, Nevada, Massachusetts, and Nebraska. They specialize in eliminating high interest for credit card debts and support their clients in boosting their credit score, if they respect the repayment plan.

Payoff has an experienced team aiming to proactively support clients in their journey toward mastering their finances. Clients that have managed to eliminate a minimum of $5,000 balance on their credit cards saw on average a boost of FICO score of 40 points.

To qualify for a PayOff debt consolidation loan one needs to meet these criteria:

  • Credit history of minimum three years.
  • Prove of income.
  • Debt-to-income ratio inferior to 50%.
  • Minimum free cash flow of $1,000.
  • No credit delinquencies.
  • A credit report showing minimum two open accounts.
  • Have Social Security number.
  • No bankruptcies allowed for the past 24 months.
Annual Percentage Rate (APR) range 5.99% – 24.99%
Instant Prequalification Yes
Origination Fee, Annual Fee, Late Fee Origination fee 0-5%, no annual fee, no late fee
Term 2 – 5 years
Amount $5,000 – $40,000
Time to Receive Funds Usually three to six days after approval
Minimum Credit Score 600
Rating 3.9


  • Offers competitive annual percentage rates compared to other lenders.
  • No late fees or prepayment fees.
  • Pays the credits you want to consolidate directly.


  • Charges origination fee.
  • Terms of payment are not too generous.
  • Requires a minimum of years of credit history.
  • No discounts for autopay.
  • No co-signer option.

Payoff is a reliable alternative for borrowers looking to reduce their expenses with high-interest credit cards and consolidate them.

3. BestEgg – Guaranteed Debt Consolidation Loans Bad Credit

BestEgg is an online lending platform offering secured and unsecured personal loans made available by the nationally chartered Cross River Bank. Borrowers from all the American territory can access their services except for those in Washington D. C., Iowa, West Virginia, and Vermont.

The loan amount, term, and APR depend on various factors like your income, credit score, existing debt and credit history, among others. Best loan conditions are obtained by high-income persons who have yearly revenues of over $100,000 and a credit score of minimum 700, which in the FICO system is qualified as “good”.

Here are the conditions that you have to meet in order to get a debt consolidation loan from BestEgg:

  • Proof of income is necessary, part-time contracts qualify.
  • Debt-to-income ratio: minimum 40%.
  • The level of current cash flow high needs to be enough to cover the current expenses.
  • Social Security number and US residency.
  • Credit history of minimum 3 years and 3 accounts.
Annual Percentage Rate (APR) range 5.99%–35.99%
Instant Prequalification Yes
Origination Fee, Annual Fee, Late Fee Origination fee 0.99%–5.99%, no annual fee, late fee of $15
Term 3 – 5 years
Amount $2,000 – $50,000
Time to Receive Funds Usually one day after approval
Minimum Credit Score 600
Rating 3.7


  • Secured loan option available.
  • No prepayment penalty.
  • Possibility to fund credit in one day.
  • Best credit conditions available for high-income earners.


  • Higher interest rate range than competitors.
  • High origination fee.
  • Option to pay other creditors directly not available.

BestEgg is the best choice for customers with high income and good credit scores as they are able to obtain advantageous loan conditions.

4. Upstart – Best for Poor Credit Loans For Debt Consolidation

Serving over 1 million clients Upstart proposes unsecured debt consolidation loans for clients with scarce credit history all over the U.S. except Iowa and West Virginia.

They stand out because of one essential feature: the use of an artificial intelligence algorithm to qualify potential borrowers. When evaluating a request Upstart approach considers also variables like the applicant’s studies, industry, job history, and earning potential.

Their qualification method approved 27% more loans than the traditional lending model.

Qualification criteria:

  • S. residency.
  • Minimum 18 years old.
  • Proof of regular income.
  • A minimum level of annual income: $12,000.
  • Personal bank account with the associated routing number.
  • Valid email address.
Annual Percentage Rate (APR) range 6.12% – 35.99%
Instant Prequalification Yes
Origination Fee, Return Fee, Late Fee Origination fee 0%–8%; late fee – the higher amount between 5% of the due amount or $15; return fee $15; paper fee $10
Term 3 or 5 years
Amount $1,000 – $50,000
Time to Receive Funds One day after approval
Minimum Credit Score No
Rating 3.8


  • Quite flexible for credit range options.
  • AI-based qualification algorithm that has higher rates of approval.
  • Offers options for borrowers with little credit history and a fair credit score.
  • Customizable payment date.
  • Funds loans in the next business day after approval.
  • Direct payment option available.


  • High level of origination fee, plus various other fees.
  • Limited options as loan terms, just 3 years or 5 years.
  • Co-signer option not available.
  • Secured option not available.

Upstart is a valid option for clients with fair credit scores and for those with no or little credit history. It’s probably not the best alternative for clients with a good credit score as they can obtain better rates with other lenders.

5. LightStream – Best for Bad Credit Debt Consolidation Loans

LightStream is the subsidiary and online lending division of Sun Trust Bank, a national leading financial service provider. Based on its proprietary technology and innovative products, the company aims to provide customers having strong credit scores with highly competitive financing via a simple online process.

LightStream has two interesting features that catch consumers’ eyes: the Loan Experience Guarantee and the Rate Beat Program. In short, the company will propose a discounted rate by 0.1% if you get approval for an unsecured loan from the competition in the same terms.

Plus, they offer a 30-day satisfaction guarantee and a compensation of $100 if you are not completely satisfied.

Qualification Criteria:

  • Proven ability to save supported by evidence like retirement savings, liquid assets, cash down payments for properties.
  • A rich credit history.
  • Credit history with various account types (credit cards, car loan, mortgage, etc.).
  • Stable income that covers existing debt and the new loan.
  • No or few payment delinquencies.
Annual Percentage Rate (APR) range 2.49% – 19.99% with AutoPay
Instant Prequalification No
Origination Fee, Return Fee, Late Fee No
Term 2 – 12 years
Amount $5,000 – $100,000
Time to Receive Funds Same day
Minimum Credit Score Not displayed
Rating 4.0


  • Very competitive interest rates.
  • No fees.
  • Discounted rate autopay.
  • Particular features like satisfaction guarantee and Rate Beat Program.
  • Possibility to get approved and receive money on the same day.


  • No prequalification option.
  • Credit history of several years.
  • No direct payment to creditors option.
  • Requires the existence of other assets to prove your saving ability.

LightStream is a reliable option for consumers with high credit scores looking for large loans, long repayment terms and low-interest rates.

Features of Debt Consolidation Loans for Bad Credit

If managed properly a debt consolidation loan has the power to fasten your way out of debt and/or save your money along the way.

These loans are of two types:

  • Secured debt consolidation loans. Secured loans are those that imply collateral, meaning they are backed by other assets belonging to the borrower such as a piece of land, a property, a car, etc.
  • Unsecured debt consolidation loans. Unsecured loans don’t require collateral, but they tend to be more difficult to obtain, offer lower amounts as credit, and with higher interest rates.

In both cases, the interest rates of debt consolidation loans are typically lower than the rates imposed by other types of loans, particularly credit cards.

A common feature of debt consolidation loans is that they propose fixed monthly rates, thus  your rate is the same for the entire period. They also come with a fixed interest rate and an established day of the month for payment.

Debt consolidation loans are installment loans, a fact that makes them cheaper than credit cards and easier to manage. In comparison, credit cards have a variable interest rate and variable monthly payments in function of the available balance and level of interest.

When applying for a consolidation loan the lender you contacted will execute a hard credit check before approving your loan. This operation may eventually lower a bit your credit score temporarily, but if you pay in due time, your credit score may improve.

Debt consolidation will work in your favor if you have fixed your spending issues, otherwise, a debt consolidation loan on its own will not solve any financial problem.

Advantages and Disadvantages of Debt Consolidation Loans

All credit options have their advantages and disadvantages, and debt consolidation loans are not an exception. These potential advantages and disadvantages depend on your financial situation.

As general guideline debt consolidation is a powerful tool for persons having several debts with high-interest rates and a total sum of debt larger than $10,000.


  • Minimize the paid interest rate. If you have multiple debts with high interest rates, rolling them in one debt with a better interest rate will save you money.
  • Streamline your monthly payments. If you find the right debt consolidation loan for your situation you can reduce your monthly payoff.
  • Get out of debt quicker. If you pay your installments in due time and do not acquire new debt you have all chances to reach the debt-free status.
  • Improve your debt management. Knowing exactly what sum of money you have to pay each month and when, can help you manage better your finances. Plus, having just one payment instead of several will simplify such operations.
  • Boost your credit score. One monthly payment is easier to make and paying in due time will bring you a better credit score in time. Credit scoring models take into consideration heavily how much of your available balance on the credit cards has been used. Debt consolidation can lower this ratio and consequently the credit score levels up.


  • Transfer, set-up, and monthly fees may be costly. Your current creditors may charge fees for anticipated reimbursement or for balance transfer. And your debt consolidation lender may charge monthly and set up fees. Check them upfront.
  • Missed payments damage your credit score. You have to pay your installments in full each month, otherwise, there are consequences on your scoring.
  • You may lose your collateral. If you chose a secured loan and fail to pay, the asset you put as collateral may be repossessed.
  • Potential loss of existing discounts or rebates. In the case of debt consolidation, you may lose access to special provisions such as interest rate discounts for student loans.

How to Get Debt Consolidation Loans for Bad Credit?

Each lender has its own requirements, but most lenders have more or less similar procedures for getting a loan, as they have to respect strict regulations.

Here are the steps to follow on a concrete example. LightStream will be used as financial provider.

Step 1: Visit the Viva Payday Loans Official Site

Visit LightStream website and choose the type of loan that you are interested in. In this case debt consolidation loan. Access the corresponding page.

Next look for a prominent button that is placed usually in the right-up corner. In our example, the button is called “Apply now”. Click on it.

Step 2: Complete the Application Form

In our case, it has four pages:

  • Loan Information – Complete the required fields: type of application, loan purpose, loan amount, loan term, zip code, payment method.
  • Personal Information – Complete the requested details: name, email, address, city, state, Social Security number, date of birth, citizenship, employment status, sources of income, monthly housing costs, other wealth components.
  • Security Information – Provide the information requested to create an account (password, security question, and answer).
  • Confirm and Submit – Read the terms and submit your application.

Step 3: Get the Decision

Depending on your case, the decision can take several days. Plus, for this step you also need a valid Visa or Mastercard credit card.

Step 4: Receive the Loan

You can receive your funds from this lender within the same day, after receiving the approval, or within up to 30 days from the approval. To receive the funds the same day you must approve and sign the contract electronically.

Request Your Debt Consolidation Loans at our Top Rated Provider – Viva Payday Loans


Can a debt consolidation loan reduce my interest rate?

Which are the types of debt that I can consolidate?

How does debt consolidation impact my credit score?

Has a debt consolidation loan risks?

Should I consolidate all my debt?

About Jayme Wium PRO INVESTOR

Jayme is a professional freelance writer specializing in personal finance, business, nutrition, botany and mental health. She has studied extensively in these fields and spends a considerable amount of her time creating content to help simplify complex concepts for the everyday person.

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