Debt consolidation companies help consumers combine existing debts, which allows them to make only one payment per month. This can produce savings when done right, but there are plenty of potential pitfalls along the way, including companies that advertise consolidation but really offer more drastic services. In particular, a lot of companies actually specialize in debt settlement.
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6 Best Debt Consolidation Companies of 2024
- LightStream
- SoFi
- Discover
- Achieve Personal Loans
- InCharge Debt Solutions
- GreenPath
The best debt consolidation company overall is LightStream because it offers debt consolidation loans of up to $100,000 with an APR range of 5.95% to 20.24%. LightStream does not charge an origination fee, and it offers the possibility of getting the loan funded the same day you apply.
Plenty of other good options are available, too. In general, there are two varieties of debt consolidation companies to consider: companies offering debt consolidation programs that negotiate with the borrower’s existing creditors to lower their rates, and companies that simply offer a new loan with better terms. We’ll highlight the best of each bunch below.
Table of Contents
Best Companies That Offer Debt Consolidation ProgramsBest Debt Consolidation Loan CompaniesDebt Consolidation Companies That Actually Offer Debt SettlementTips for Choosing the Best Debt Consolidation CompanyAlternatives to Debt Consolidation Companies
Best Companies That Offer Debt Consolidation Programs
InCharge Debt Solutions
InCharge is a non-profit organization that claims to help people with $1,000 to $50,000 in debt become debt-free in 3 to 5 years. With their debt management and consolidation program, they negotiate with the client’s existing creditors to get lower rates. InCharge’s website says that the average InCharge client has their interest rate reduced to around 9%. Then, the client pays InCharge once a month, and InCharge distributes that money among the existing debts.
InCharge also offers debt settlement. They have free credit counseling and educational resources, too.
Key Facts About InCharge Debt Solutions:
- Year established: 1997
- Non-profit: Yes
- BBB rating: A+
- Time to get debt-free: 3 to 5 years
- Set-up fee: Average of $50, maximum $75
- Monthly fee: Average of $33, maximum $60
- Types of debt eligible: Unsecured debts
- Accredited by: Better Business Bureau, Council on Accreditation (COA), National Foundation for Credit Counseling (NFCC) and U.S. Department of Housing & Urban Development (HUD)
GreenPath
GreenPath is a non-profit organization that works to reduce their customers’ debt payments. Customers makes a single monthly payment to Greenpath, which distributes the money to their creditors. Greenpath also offers free credit counseling.
In addition, the company provides financial counseling for homebuyers and people with student loans, which may cost money depending on the type.
Key Facts About GreenPath:
- Year established: 1961
- Non-profit: Yes
- BBB rating: A+
- Time to get debt-free: 3 to 5 years
- Set-up fee: $0 to $50
- Monthly fee: $0 to $75
- Types of debt eligible: Unsecured debts
- Accredited by: Better Business Bureau, Council on Accreditation (COA), National Foundation for Credit Counseling (NFCC), U.S. Department of Housing & Urban Development (HUD) and Executive Office for U.S. Trustees
Best Debt Consolidation Loan Companies
LightStream
LightStream offers personal loans for “practically everything,” according to their website. That includes debt consolidation. LightStream is one of the least expensive debt consolidation loan providers on the market, with low APRs, no origination fees, large loan amounts and long payoff periods. The company also operates nationwide and lends to people with fair-to-excellent credit.
Key Facts About LightStream Debt Consolidation:
- Ways to consolidate debt: Personal loans only
- Direct payments to existing creditors: No
- Credit score required: 660, reportedly
- Origination fee: 0%
- APRs: 5.95% to 20.24%
- Amounts offered: $5,000 to $100,000
- Payoff timeline: 24 - 84 months
SoFi
SoFI offers personal loans that are especially good for debt consolidation because of potentially low costs and high loan amounts. SoFi loans provide as much as $100,000 in funding, with interest rates as low as 8.99% and no fees of any kind. An application decision usually takes just 2-4 business days.
Key Facts About SoFi Debt Consolidation:
- Ways to consolidate debt: Personal loans only
- Direct payments to existing creditors: No
- Credit score required: 680+
- Origination fee: $0
- APRs: 8.99% - 29.99%
- Amounts offered: $5,000 - $100,000
- Payoff periods: 36 to 84 months
Discover
Discover offers three different possibilities for debt consolidation: personal loans, home equity loans and credit cards.
Credit cards are best for people who have small debts they can pay off within a card’s introductory 0% balance transfer APR period. Home equity loans are best for homeowners who want the lowest interest rates. And personal loans are best for people who don’t want to use their house as collateral but need more funding than they might get on a credit card.
When it comes to balance transfers and personal loans, Discover will handle paying off your old creditors.
Key Facts About Discover Debt Consolidation:
- Ways to consolidate debt: Personal loans, home equity loans and credit cards
- Direct payments to existing creditors: Yes
- Credit score required: Reportedly 660 for personal loans, 620 for home equity loans, 700+ for the best credit cards
- Fees: $0 origination fee on personal loans, $0 origination fee on home equity loans, $0 annual fee on credit cards
- APRs: 7.49% - 24.99% on personal loans, 3.99% to 11.99% on home equity loans, 11.99% to 22.99% on the best credit cards
- Amounts offered: $2,500 to $35,000 on personal loans, $35,000 to $200,000 on home equity loans, varies by credit card
- Payoff periods: 36 to 84 months on personal loans, 10 to 30 years on home equity loans, indefinite on credit cards (but 0% periods are temporary)
Achieve Personal Loans
Achieve Personal Loansis the best debt consolidation loan provider for people with low credit scores, as their minimum requirement is just 620. Plus, they offer a very reasonable APR range and the potential for no origination fee. Their loans are large, too, with the minimum being $7,500.
Achieve Personal Loansoperates nationwide and lends to people with bad-to-excellent credit. They also provide direct payments to creditors for consolidation.
Key Facts About Achieve Personal Loans Debt Consolidation:
- Ways to consolidate debt: Personal loans only
- Direct payments to existing creditors: Yes
- Credit score required: 620
- Origination fee: 1.99% - 4.99%
- APRs: 8.99% - 35.99%
- Amounts offered: $7,500 to $40,000
- Payoff periods: 24 to 60 months
Debt Consolidation Companies That Actually Offer Debt Settlement
With debt settlement, the customer still makes a monthly payment to the company “helping” them, but the company will often withhold that money from the customer’s creditors until the customer defaults and the company has a better negotiating position. This is horrible for your credit score.
Plus, record of the settlement – if one is even reached – will stay on your credit report for seven years. And even though you could get a portion of your debt forgiven in the process, settlement companies charge expensive fees that are a portion of the original debt, often 15% to 20%.
- National Debt Relief
People with $7,500 to $100,000 in debt can make monthly contributions to an account that National Debt Relief will eventually use to pay off creditors after negotiating a settlement. - Freedom Debt Relief
Customers with $1,000 to $100,000+ in debt can make monthly payments to the company, which then settles the debt with creditors once they determine enough funds have built up. - CuraDebt
This company accepts monthly payments from customers with $5,000+ in debt and then uses those payments to settle debts with existing creditors.
Tips for Choosing the Best Debt Consolidation Company
Avoid debt settlement companies disguised as debt consolidation companies.
Some companies advertise that they offer debt consolidation, but instead offer debt settlement. They try to negotiate with your creditors to let you pay a portion of what you owe in a lump sum and have the rest forgiven. But they can charge expensive fees, and debt settlement stays on your credit report for seven years.
Compare your options thoroughly.
Most companies with debt consolidation programs will offer a free consultation to give you an idea of how they can help you. In addition, companies that offer personal loans or credit cards will often let you pre-qualify to see what rates you might get if approved. You can compare these options against one another to see which is best for you.
Only work with accredited companies.
The best debt consolidation companies are ones that are accredited by reputable organizations such as the U.S. Chamber of Commerce, Council on Accreditation, National Foundation for Credit Counseling, and International Association of Professional Debt Arbitrators. It’s also a good idea to check the company’s Better Business Bureau score.
Pay as few fees as possible.
If you’re consolidating through a personal loan and your credit score is 660 or higher, you have a good chance of getting a loan with no origination fee. In addition, some balance transfer credit cards have no balance transfer fee. Companies that offer debt consolidation programs pretty much always charge fees, but some are more expensive than others.
Understand that consolidation programs can hurt your credit.
Companies that offer debt consolidation programs often encourage customers to not make payments to their existing creditors while the negotiation processes are going on. That’s because lenders are more willing to negotiate new terms or settle when the account is already in default. But this leads to late fees and credit score damage from not making payments.
Remember that debt consolidation loans damage credit less.
Applying for a debt consolidation loan leads to a hard inquiry into your credit, which will temporarily drop your score by 5 to 10 points. Opening the account can also have a bit of a negative impact on your credit. Your overall debt load may increase by a small amount, too, depending on whether your loan has an origination fee. But in the long run, the regular monthly payments you make on the loan will help to improve your credit score.
Alternatives to Debt Consolidation Companies
Debt consolidation, whether through a loan or a specialized company, is not the only strategy available for dealing with debt. There are few other options you can consider.
- Credit Counseling
Credit counseling won’t directly help you get rid of your debt, but it can help you figure out the best path for doing so, and it’s often free. - Debt management
Debt management involves working out a new payment agreement with your lender. For example, they might lower your required monthly payment, lower your interest rate or waive certain fees. - Debt settlement
Debt settlement is not ideal because it usually involves withholding payments until you make an agreement with your creditor to pay a lump sum of part of what you owe, in exchange for having the rest forgiven. Withholding payments can have a big negative impact on your credit score. In addition, debt settlement stays on your credit report for seven years. - Bankruptcy
This should only be a last resort. Bankruptcy can get many of your debts cleared, but it will come at the cost of massive credit-score damage and the potential liquidation of some of your assets. Bankruptcy can stay on your credit report for up to 10 years.
Methodology
When comparing debt consolidation companies, WalletHub’s editors looked at factors such as how long it takes to get debt free, fees, types of eligible debts and company accreditation. For companies that offer loans, we also looked at APRs, loan requirements, loan sizes, transparency and the application process.
