Checking rates won't affect your credit score
See Your Personalized Results
How Does LendingTree Get Paid?
LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
How Does LendingTree Get Paid?
LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
Privacy Secured|Advertising Disclosures
Written by Amanda Push | Edited by Katie Lowery | Updated February 7, 2024
How Does LendingTree Get Paid?
LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
How Does LendingTree Get Paid?
LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
| Lender | User ratings | Best for... | APR range | Loan amounts | Credit required | Repayment terms | |
|---|---|---|---|---|---|---|---|
(14) User Ratings & Reviews Ratings and reviews are from real consumers who have used the lending partner’s services. | Quick funding | 5.99% - 35.99% | $3,500 - $40,000 | 680 | 24 to 60 months | See Personalized Results | |
(16,269) User Ratings & Reviews Ratings and reviews are from real consumers who have used the lending partner’s services. | Borrowers with bad credit | 6.40% - 35.99% | $1,000 - $50,000 | 300 | 36 and 60 months | See Personalized Results | |
(3,637) User Ratings & Reviews Ratings and reviews are from real consumers who have used the lending partner’s services. | Peer-to-peer loans | 6.99% - 35.99% | $2,000 - $50,000 | 560 | 24 to 60 months | See Personalized Results | |
| User ratings coming soon | Current Wells Fargo customers | 7.49% - 23.34% (with discounts) | $3,000 - $100,000 | Not specified | 12 to 84 months | See Personalized Results | |
(2,181) User Ratings & Reviews Ratings and reviews are from real consumers who have used the lending partner’s services. | Small loan amounts | 8.49% - 35.99% (with autopay) | $1,000 - $50,000 | 580 | 24 to 84 months | See Personalized Results | |
(239) User Ratings & Reviews Ratings and reviews are from real consumers who have used the lending partner’s services. | No origination fees | 8.99% - 24.89% (with autopay) | $5,000 - $100,000 | Not specified | 24 to 144* months | See Personalized Results | |
(97) User Ratings & Reviews Ratings and reviews are from real consumers who have used the lending partner’s services. | Avoiding fees | 8.99% - 29.99% (with autopay) | $5,000 - $100,000 | 680 | 24 to 84 months | See Personalized Results | |
(2,457) User Ratings & Reviews Ratings and reviews are from real consumers who have used the lending partner’s services. | Borrowers with excellent credit | 8.99% - 35.99% | $2,000 - $50,000 | 600 | 36 to 60 months | See Personalized Results | |
(5,081) User Ratings & Reviews Ratings and reviews are from real consumers who have used the lending partner’s services. | Interest rate discounts | 8.99% - 35.99% | $5,000 - $50,000 | 620 | 24 to 60 months | See Personalized Results | |
(2,682) User Ratings & Reviews Ratings and reviews are from real consumers who have used the lending partner’s services. | Short repayment terms | 9.95% - 35.99% | $2,000 - $35,000 | 580 | 12 to 60 months | See Personalized Results | |
(153) User Ratings & Reviews Ratings and reviews are from real consumers who have used the lending partner’s services. | Borrowers with good credit | 11.72% - 17.99% | $5,000 - $40,000 | 640 | 24 to 60 months | See Personalized Results |
See Personalized Offers
Read more about how we chose our picks for best debt consolidation lenders.
Upstart: Best for borrowers with bad credit
| User ratings | (16,269) User Ratings & Reviews Ratings and reviews are from real consumers who have used the lending partner’s services. |
| APR range | 6.40% - 35.99% |
| Loan amounts | $1,000 - $50,000 |
| Loan terms | 36 and 60 months |
| Origination fee | 0.00% - 12.00% |
| Min. credit score | 300 |
| Pros | Cons |
|---|---|
Flexible loan ranges Able to use loan funds to cover student debt May receive funds as quickly as one business day | Doesn’t offer joint applications or secured loans Limited loan repayment terms Charges an origination fee (0.00% - 12.00%) |
Upstart might be a good choice if you’re looking for a small loan, as it lets you borrow loans starting at just $1,000. It also offers low APRs starting at 6.40%, but you’ll need strong credit to get the lowest rates. Upstart also charges an origination fee (0.00% - 12.00%) and has limited loan terms. Read our full Upstart review.
To get a loan from Upstart, you must be a citizen or permanent resident living in the U.S. You must have a current full-time job, a full-time job that starts within six months or another source of income.
See Your Personalized Results
Reach Financial: Best for quick funding
| User ratings | (14) User Ratings & Reviews Ratings and reviews are from real consumers who have used the lending partner’s services. |
| APR range | 5.99% - 35.99% |
| Loan amounts | $3,500 - $40,000 |
| Loan terms | 24 to 60 months |
| Origination fee | 0.00% - 8.00% |
| Min. credit score | 680 |
| Pros | Cons |
|---|---|
Access to free monthly credit score Flexible loan amounts and terms Ability to change due date | May charge an origination fee Limited loan use High maximum APR |
Reach Financial offers personal loans specifically for debt consolidation and credit card refinancing. This lender’s 24-hour funding timeline and perk of supplying free access to your monthly credit score makes it a strong contender for consumers looking to pay off their current debts.
If you take out a Reach Financial personal loan, you may have to pay an origination fee (0% to 8%) of your loan amount. This lender’s rates can also get as high as 35.99%. Reach’s limited loan use may not be a good fit for some consumers. Read our full Reach Financial review.
If you want to apply for a Reach Financial personal loan, you’ll need to meet the following criteria:
- 680 minimum credit score
- $20,000 minimum annual income
- Must not live in the following states: Colorado, Connecticut, Maine, Mississippi, New Jersey, Nevada, Oregon, Rhode Island, Tennessee, Utah, Vermont, West Virginia or Wyoming
See Your Personalized Results
Prosper: Best for peer-to-peer loans
| User ratings | (3,637) User Ratings & Reviews Ratings and reviews are from real consumers who have used the lending partner’s services. |
| APR range | 6.99% - 35.99% |
| Loan amounts | $2,000 - $50,000 |
| Loan terms | 24 to 60 months |
| Origination fee | 1.00% - 7.99% |
| Min. credit score | 560 |
| Pros | Cons |
|---|---|
Offers quick funding Flexible loan amount options Peer-to-peer lending alternative to traditional lenders | Limited options for loan terms Charges an origination fee Charges late fees |
Prosper is a peer-to-peer lender that connects borrowers with investors. It offers a fast, easy, online process that lets you prequalify for offers before you submit a full application. You’ll get a fixed interest rate that won’t change over the life of your loan, but you may have to pay an origination fee ranging from 1.00% - 7.99%. Read our full Prosper review.
To receive a personal loan from Prosper, you’ll need to meet the following eligibility requirements:
- Be a U.S. citizen
- Have a personal bank account
- Have a Social Security number
- Can’t live in Iowa or West Virginia
See Your Personalized Results
Wells Fargo: Best for current Wells Fargo customers
| User ratings | User ratings coming soon |
| APR range | 7.49% - 23.34% (with discounts) |
| Loan amounts | $3,000 - $100,000 |
| Loan terms | 12 to 84 months |
| Origination fee | No origination fees |
| Min. credit score | Not specified |
| Pros | Cons |
|---|---|
High maximum loan amount of $100,000 Charges no origination, closing or prepayment fees May be approved within one business day | High minimum loan amount of $3,000 May charge late fees Only offers personal loans to Wells Fargo customers |
If you’re looking for a large debt consolidation loan, Wells Fargo might be able to help. It offers loans up to $100,000 and repayment terms as long as 12 to 84 months.
Wells Fargo loans don’t include any types of fees, such as origination fees, late fees and prepayment penalties. You can use its online calculator to get an idea of what repayment would look like. On top of that, consumers may receive a loan approval as quickly as one business day. Read our full Wells Fargo review.
In order to be eligible for a personal loan with Wells Fargo, you’ll need to be a current customer with this bank.
See Your Personalized Results
Upgrade: Best for small loan amounts
| User ratings | (2,181) User Ratings & Reviews Ratings and reviews are from real consumers who have used the lending partner’s services. |
| APR range | 8.49% - 35.99% (with autopay) |
| Loan amounts | $1,000 - $50,000 |
| Loan terms | 24 to 84 months |
| Origination fee | 1.85% - 9.99% |
| Min. credit score | 580 |
| Pros | Cons |
|---|---|
Flexible loan terms of 24 to 84 months Potential autopay discount May receive funds as soon as one business day | Charges an origination fee (1.85% - 9.99%) Isn’t clear on some eligibility requirements May have to pay late fees |
Upgrade is another online lender that provides debt consolidation loans up to $50,000. It also offers a relatively long repayment term of up to 84 months, but there’s no penalty for paying off your loan earlier. However, you may have to pay an origination fee (1.85% - 9.99%), and you may have to pay a late fee if you’re more than 15 days behind. Read our full Upgrade review.
Aside from its 580 credit score requirement, Upgrade also specifies that consumers will need to meet the following criteria:
- Must be at least 18 years old
- Must be a U.S. citizen, permanent resident or living in the U.S. with valid visa
- Must verify your bank account
- Must have a valid email
See Your Personalized Results
LightStream: Best for no origination fees
| User ratings | (239) User Ratings & Reviews Ratings and reviews are from real consumers who have used the lending partner’s services. |
| APR range | 8.99% - 24.89% (with autopay) |
| Loan amounts | $5,000 - $100,000* |
| Loan terms | 24 to 144 months* |
| Origination fee | No origination fee |
| Min. credit score | Not specified |
| Pros | Cons |
|---|---|
Low APR (7.49%*) Charges zero fees High maximum loan amount of $100,000 | No prequalification services High minimum loan amount of $5,000 |
LightStream emerges as the winner in several important categories. It offers one of the lowest APRs at the time of writing, with rates starting at just 8.99%. Plus, it offers large-amount loans up to $100,000 and gives you a maximum of 144 months to pay them off. However, LightStream does not offer the opportunity to get preapproved for a loan. Read our full LightStream review.
Because LightStream only approves consumers with good to excellent credit, here’s what qualities they believe fall under the “excellent credit” category:
- At least five years of a robust credit history
- Ability to save (proven with assets like savings, retirement and investment accounts)
- Low debt-to-income ratio
- A payment history with no delinquencies
*Your loan terms, including APR, may differ based on loan purpose, amount, term length, and your credit profile. Excellent credit is required to qualify for lowest rates. Rate is quoted with AutoPay discount. AutoPay discount is only available prior to loan funding. Rates without AutoPay are 0.50% points higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice. Payment example: Monthly payments for a $10,000 loan at 5.99% APR with a term of 3 years would result in 36 monthly payments of $304.17. © 2023 Truist Financial Corporation. Truist, LightStream, and the LightStream logo are service marks of Truist Financial Corporation. All other trademarks are the property of their respective owners. Lending services provided by Truist Bank.
See Your Personalized Results
SoFi: Best for avoiding fees
| User ratings | (97) User Ratings & Reviews Ratings and reviews are from real consumers who have used the lending partner’s services. |
| APR range | 8.99% - 29.99% (with autopay) |
| Loan amounts | $5,000 - $100,000* |
| Loan terms | 24 to 84 months |
| Origination fee | 0.00% - 6.00% |
| Min. credit score | 680 |
| Pros | Cons |
|---|---|
Same-day funding available Doesn’t charge any fees Allows for co-applicants | High minimum borrowing amount of $5,000 High minimum credit score requirement Not available to LendingTree customers in Vermont |
SoFi offers some of the largest loan amounts and longest repayment terms on this list of debt consolidation loan companies. You may be able to borrow up to $100,000 and choose a repayment term of up to 24 to 84 months. Plus, you don’t have to worry about being required to pay fees, including an origination fee, on your loan. Read our full SoFi review.
Pricing Disclosure:
Fixed rates from 8.99% APR to 25.81% APR reflect the 0.25% autopay interest rate discount and a 0.25% direct deposit interest rate discount. SoFi rate ranges are current as of 05/19/2023 and are subject to change without notice. The average of SoFi Personal Loans funded in 2022 was around $30K. Not all applicants qualify for the lowest rate. Lowest rates reserved for the most creditworthy borrowers. Your actual rate will be within the range of rates listed and will depend on the term you select, evaluation of your creditworthiness, income, and a variety of other factors. Loan amounts range from $5,000– $100,000. The APR is the cost of credit as a yearly rate and reflects both your interest rate and an origination fee of 0%-6%, which will be deducted from any loan proceeds you receive. Autopay: The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Autopay is not required to receive a loan from SoFi. Direct Deposit Discount: To be eligible to potentially receive an additional (0.25%) interest rate reduction for setting up direct deposit with a SoFi Checking and Savings account offered by SoFi Bank, N.A. or eligible cash management account offered by SoFi Securities, LLC (“Direct Deposit Account”), you must have an open Direct Deposit Account within 30 days of the funding of your Loan. Once eligible, you will receive this discount during periods in which you have enabled payroll direct deposits of at least $1,000/month to a Direct Deposit Account in accordance with SoFi’s reasonable procedures and requirements to be determined at SoFi’s sole discretion. This discount will be lost during periods in which SoFi determines you have turned off direct deposits to your Direct Deposit Account. You are not required to enroll in direct deposits to receive a loan.
Other than its credit score requirement, SoFi also has requirements around employment. To be eligible, borrowers must either be:
- Employed or have an offer to start employment within 90 days
Or:
- Must receive an income from other sources (this can include alimony or Social Security benefits)
See Your Personalized Results
Best Egg: Best for borrowers with excellent credit
| User ratings | (2,457) User Ratings & Reviews Ratings and reviews are from real consumers who have used the lending partner’s services. |
| APR range | 8.99% - 35.99% |
| Loan amounts | $2,000 - $50,000 |
| Loan terms | 36 to 60 months |
| Origination fee | 0.99% - 8.99% |
| Min. credit score | 600 |
| Pros | Cons |
|---|---|
May receive funds as soon as the next business day Option to change your due date No prepayment penalties for paying your loan off early | Charges an origination fee of 0.99% - 8.99% High credit score requirement (600) High income requirement to receive lowest APR |
Unlike some other loan companies, Best Egg makes its credit score requirements explicit: You must have a score of at least 600 to take out a loan. Assuming you can meet this and other requirements, you could score an APR as low as 8.99% and may be able to borrow up to $50,000. Best Egg says borrowers with a credit score of at least 700 and a minimum individual annual income of $100,000 can get their lowest APR. Read our full Best Egg review.
Other than a minimum credit score of 600, Best Egg does not specify other qualification criteria, such as debt-to-income ratio or credit history. However, you will need to provide the following information during the application process:
- Full name
- Contact information (address, email and phone number)
- Date of birth
- Employment history
- Social Security number
- Annual income
See Your Personalized Results
Achieve: Best for interest rate discounts
| User ratings | (5,081) User Ratings & Reviews Ratings and reviews are from real consumers who have used the lending partner’s services. |
| APR range | 8.99% - 35.99% |
| Loan amounts | $5,000 - $50,000 |
| Loan terms | 24 to 60 months |
| Origination fee | 1.99% - 6.99% |
| Min. credit score | 620 |
| Pros | Cons |
|---|---|
May receive loans within 48 hours of approval Can choose your payment due date Allows for co-applicants | Loans are not offered in all 50 states Charges an origination fee of 1.99% - 6.99% High minimum borrowing amount of ($5,000) |
Achieve is another lender worth exploring if you’re looking to borrow more than $5,000. Its loans come with an origination fee between 1.99% - 6.99%, and you can choose a repayment term of 24 to 60 months. Achieve also offers a quick funding timeline with consumers receiving their personal loan funds in as little as 48 hours after they are approved.
There are many ways to receive interest rate discounts from Achieve. You can add a qualified co-borrower with sufficient income, pay off qualifying existing debt with at least 50% of your Achieve debt consolidation loan, and prove you have significant retirement savings to earn a lower APR. Read our full Achieve review.
While Achieve isn’t exactly clear on the specifics, this lender takes the following factors into consideration when deciding whether to approve you for a loan:
- Credit score
- Credit utilization ratio
- Credit history
See Your Personalized Results
Avant: Best for short repayment terms
| User ratings | (2,682) User Ratings & Reviews Ratings and reviews are from real consumers who have used the lending partner’s services. |
| APR range | 9.95% - 35.99% |
| Loan amounts | $2,000 - $35,000 |
| Loan terms | 12 to 60 months |
| Origination fee | Up to 9.99% |
| Min. credit score | 580 |
| Pros | Cons |
|---|---|
Funding as soon as the next business day Low credit score requirements (most Avant borrowers have scores between 600 and 700) No prepayment penalty | May pay an origination fee Does not allow for co-applicants Unclear about specific eligibility requirements for personal loans |
Avant offers personal loans for debt consolidation between $2,000 and $35,000, which you can pay off over the course of 12 to 60 months. Two potential downsides to consider: You might have to pay an origination fee, and you likely can’t apply with a cosigner, which could make it difficult for some consumers with low credit scores to qualify. Read our full Avant review.
Avant isn’t entirely clear about its eligibility criteria, but it does offer consumers the opportunity to prequalify. However, applicants must have a personal checking or savings account to qualify for a loan with Avant.
See Your Personalized Results
Happy Money: Best for borrowers with good credit
| User ratings | (153) User Ratings & Reviews Ratings and reviews are from real consumers who have used the lending partner’s services. |
| APR range | 11.72% - 17.99% |
| Loan amounts | $5,000 - $40,000 |
| Loan terms | 24 to 60 months |
| Origination fee | 1.50% - 5.50% |
| Min. credit score | 640 |
| Pros | Cons |
|---|---|
Eligibility requirements are clear No prepayment penalties or late fees Rates may be lower than credit card interest rates | Loans can only be used to consolidate credit card debt May charge an origination fee (1.50% - 5.50%) No joint applications |
Happy Money is a solid option for borrowers with less-than-perfect credit since it specifies a relatively low credit score requirement of 640. With this lender, you can borrow up to $40,000 and pay it off over a maximum period of 60 months. Note that a personal loan through Happy Money can only be used for credit card consolidation. Read our full Happy Money review.
To qualify with Happy Money, you’ll need to meet the following criteria:
- No current payment delinquencies
- Credit history of at least three years
- Debt-to-income ratio below 50%
See Your Personalized Results
Trustpilot
What is debt consolidation?
Debt consolidation is a debt management strategy that involves rolling one or multiple debts into another form of financing. For instance, you may take out a debt consolidation loan or balance transfer credit card and use it to pay off existing debts with better terms.
Ideally, you’ll want to consolidate your debt to a lower APR than what you’re currently paying. This can help you save money on interest, lower your monthly payments and pay off debt faster.
On this page
- When is a debt consolidation loan a good idea?
- How does debt consolidation work?
- How to get a debt consolidation loan
- 3 major benefits of debt consolidation
- Debt consolidation vs. debt relief: What’s the difference?
- How your credit score impacts loan rates
- Alternatives to debt consolidation
- Frequently asked questions
- How we chose the best debt consolidation loans
When is a debt consolidation loan a good idea?
There’s no one-size-fits-all debt management strategy. To determine that, you’ll need to take a close look at your finances.
Debt consolidation is a good idea when…
- You have debt with high (or variable) interest rates
- You can qualify for a lower APR than what you’re currently paying on your debts
- You’re struggling to manage credit card bills and loan payments
- You want to pay off debt faster on a set schedule
Debt consolidation is a bad idea when…
- You can’t qualify for a lower APR than what you’re currently paying on your debts
- You still won’t be able to afford your payments after consolidation
- Your debt burden is small
How does debt consolidation work?
There are many ways to consolidate debt, but it generally works the same way: You pay off one or more debts using a new debt. Some popular debt consolidation methods include personal loans and balance transfer credit cards.
Depending on your unique situation — how much debt you have, your credit score, how soon you need money, what type of debt you have and other factors — one method may work better for you than another.
Personal loan for debt consolidation
How it works: A personal loan for debt consolidation combines many types of debt into one fixed monthly payment.
| Pros | Cons |
|---|---|
Fixed APR and monthly payments Potentially lower APR than what you’re currently paying on your debt | APRs can run high for fair and bad credit borrowers Subject to fees, like loan origination fee and prepayment penalty Bad credit borrowers may not qualify at all |
Balance transfer credit card with 0% APR
How it works: A 0% APR balance transfer credit card consolidates credit card debt with an introductory no-interest period.
| Pros | Cons |
|---|---|
Introductory 0% APR periods can last as long as 20 months Potentially lower APR than what you’re currently paying on your credit cards | Variable APR Can only be used for consolidating credit card debt Intro offers reserved for borrowers with strong credit May be subject to a balance transfer fee of 3% to 5% |
Home equity loan
How it works: Tap into your home’s equity to pay off debt by using your home as collateral.
| Pros | Cons |
|---|---|
Fixed APR and monthly payments Interest rates are typically lower than with unsecured debt Can consolidate a large amount at once | Only homeowners are eligible Risk of going into foreclosure if you fail to pay You could go underwater on your home, taking out more money than it’s worth Subject to closing costs |
401(k) loan
How it works: A 401(k) loan involves borrowing money from your retirement savings plan.
| Pros | Cons |
|---|---|
No credit check needed Borrow from and pay interest to yourself, rather than a lender or bank Generally doesn’t come with taxes or penalties | Some servicers don’t allow 401(k) loans You lose investment gains of the money you borrow If you default on the loan, the amount is subject to income tax and a 10% penalty If you lose employment, you may have to repay the loan in its entirety quickly |
Debt management plan
How it works: With the help of a certified credit counselor, create a debt management plan to repay your debt within five years.
| Pros | Cons |
|---|---|
Low or no cost Credit counselor may be able to negotiate down fees and interest rates on your debts Consolidates many types of debts into one monthly payment Promotes healthy financial habits | Can only be used for unsecured debts You’ll likely have to stop using or close your credit cards Can take up to five years to complete, in which time you can’t take out credit |
How to get a debt consolidation loan
- Check your credit score. Most consolidation options have certain credit requirements, such as a minimum credit score. Unsecured personal loans don’t require collateral, which means that lenders rely more heavily on your financial situation, along with other factors, to determine eligibility. Check your credit score for free using LendingTree Spring.
- Calculate how much you need to borrow. Add up all your monthly debt payments that you wish to consolidate. You can use a personal loan to pay off credit cards, payday loans and other high-interest debts. Some lenders let you borrow as much as $100,000 for a debt consolidation loan.
- Determine the APR you need in order to save money. Your APR would need to be lower than what you’re currently paying on your debts for a personal loan to be worthwhile.
- Compare APRs by prequalifying with lenders. Many lenders let you prequalify for a personal loan to get an idea of your potential APR without impacting your credit score. This lets you compare estimated loan offers before you formally apply.
- Formally apply with a lender. If you’re approved, the lender can deposit the funds directly into your bank account. What happens next? You can use that money to pay off all types of debt. In some cases, your new lender will pay off those debts directly.
See Your Personalized Results
3 major benefits of debt consolidation
1. Simplifies your budget
Managing multiple due dates and accounts can add stress to your life and budget. Debt consolidation combines some, if not all, of your debt into one payment. You’ll only have to track a single account instead of multiple accounts and debt payments.
2. Saves you money on interest
If you’re able to secure a lower APR, you could save yourself hundreds (if not thousands) of dollars over the life of your loan. Your APR is the measure of how much interest and fees you’re paying on the loan.
3. Improves your credit score
As you pay off your debt consolidation loan, your credit utilization ratio will gradually decline, helping boost your credit. On top of that, your on-time payments will be reported to the credit bureaus, further increasing your credit score.
Debt consolidation vs. debt relief: What’s the difference?
Whereas debt consolidation involves taking out a new loan or credit card to repay debt on better terms, debt relief seeks to reduce the amount of debt you owe through negotiation or legal means. Debt relief comes in many forms, such as credit counseling, debt settlement and bankruptcy.
Debt consolidation vs. credit counseling
Credit counseling is a nonprofit service to help you manage expenses and debt payments more effectively. A credit counselor may set you up on a debt management plan and even negotiate debts and monthly payments on your behalf.
Debt consolidation vs. debt settlement
Debt settlement involves negotiating with your creditors to lower the amount of debt you owe and reduce fees charged to your account. Some companies offer this service, but these programs may come with high fees and can severely damage your credit.
Debt consolidation vs. bankruptcy
Bankruptcy is a legal process offering debt relief for an individual or business. When you file for bankruptcy, your assets may be sold to repay your creditors, or you may be enrolled in a court-ordered debt repayment plan.
How your credit score impacts loan rates
When it comes to obtaining most types of credit, including personal loans, the higher your credit score, the better the interest rates you are likely to be offered by lenders.
In the eyes of lenders, your credit score indicates how likely you are to repay a loan on time and in its entirety. Every time a lender offers someone a loan, they are taking a risk; the higher the credit score, the lower the perceived risk.
However, even borrowers looking for a personal loan with bad credit can find lenders that are willing to work with them. Keep in mind that you may not receive that lender’s lowest interest rates.
Average APR and loan amounts by credit score
| Credit score range | Average APR | Average loan amount |
|---|---|---|
| 720+ | 20.25% | $18,979 |
| 680-719 | 30.21% | $15,494 |
| 660-679 | 43.46% | $11,197 |
| 640-659 | 60.77% | $8,107 |
| 620-639 | 81.39% | $6,133 |
| 580-619 | 120.74% | $4,143 |
| 560-579 | 153.17% | $3,070 |
| Less than 560 | 174.95% | $2,392 |
Source: LendingTree user data on closed personal loans for the fourth quarter of 2023.
Why do millions of Americans trust LendingTree?
25+ years in business. 110+ million Americans served. $260+ billion in funded loans.
SECURITY
Instead of sharing information with multiple lenders, fill out one simple, secure form in five minutes or less.
SAVINGS
We’ll match you with up to five lenders from our network of 300+ lenders who will call to compete for your business.
SUPPORT
We provide ongoing support with free credit monitoring, budgeting insights and personalized recommendations to help you save.
See Your Personalized Results
Frequently asked questions
There might be a small drop in your credit score after consolidating debt, since you are taking out a new credit product or loan. You might also see a dip in your credit score if you settle a debt or work with a debt management service.
Some borrowers see their credit score increase by consolidating debt, particularly credit card balances. Paying off credit card balances lowers your credit utilization ratio, which can give your credit score a boost.
Whatever the initial effect on your credit score, debt consolidation can help you increase your credit score over the long term. If you choose an option with affordable payments, you can build up a healthy payment history, which is central to a good credit score.
Applicants with good credit will have a wider range of debt consolidation options. They can get approved more easily for balance transfer credit cards with introductory 0% APR periods and personal loans with lower APRs.
Still, there may be options for consolidating debt if you have bad credit. You could try a secured loan, such as a home equity loan, which may come with a lower APR. There are also 401(k) loans, which let you borrow money from your own retirement fund without a credit check.
That will depend on your financial situation. There are a few primary methods of debt consolidation, including personal loans, balance transfer credit cards and home equity loans. You may also consider a 401(k) loan or debt management plan to consolidate debt. To learn about your credit card debt consolidation options, talk to a credit counselor who can provide free or low-cost guidance on your debt relief options.
It always costs money to borrow money, which is why you want to find the debt consolidation option with the lowest APR to save yourself the most money in the long run.
Different debt consolidation options come with their own set of interest rates and fees. For example, some personal loan lenders charge origination fees (upfront, administrative charges) or prepayment penalty fees (for paying off a loan before the term ends). If you go with a balance transfer card, it can come with a balance transfer fee.
Debt consolidation has the potential to save you money, but it’s not guaranteed. To save money, you’ll have to consolidate your debt into another form of financing that has a lower APR than what you’re currently paying on your debts. Before you consolidate debt, it’s important to take a look at your current credit card and loan agreements to determine the APR you’re paying, so you can shop around for financial products that will save you money.
If your goal is to get out of debt faster, consolidating your debts can be a smart move. Consolidating with a personal loan, for example, can give you the option to choose a short loan term, so your debt will be paid off sooner. And if you get a lower APR than what you’re currently paying on your debts, then you can pay off your debt faster even if you pay the same amount of money toward your debt each month.
When it comes to debt consolidation loans, the higher your credit score, the lower the APR you’ll likely receive on your loan. This is because your credit score indicates to lenders how likely you are to repay a loan. A high credit score indicates a lower risk to lenders, especially since debt consolidation loans are typically unsecured.
How we chose the best debt consolidation loans
We reviewed more than a dozen lenders that offer debt consolidation loans to determine the overall best 11 lenders. To make our list, lenders must offer competitive annual percentage rates (APRs). From there, we prioritize lenders based on the following factors:
- Accessibility: Lenders are ranked higher if their personal loans are available to more people and require fewer conditions. This may include lower credit requirements, wider geographic availability, faster funding and easier and more transparent prequalification and application processes.
- Rates and terms: We prioritize lenders with more competitive fixed rates, fewer fees and greater options for repayment terms, loan amounts and APR discounts.
- Repayment experience: For starters, we consider each lender’s reputation and business practices. We also favor lenders that report to all major credit bureaus, offer reliable customer service and provide any unique perks to customers, like free wealth coaching.
LendingTree reviews and fact-checks our top lender picks on a monthly basis.
