Get your affairs in order to reduce your interest costs
You may be able to reduce your overall interest costs and reduce your monthly payment amount with a debt consolidation loan, which will allow you to take back control of your multiple debts. However, obtaining a debt consolidation loan can be difficult when you have poor credit. According to FICO, scores that are below 580 are considered as "bad" or poor. It's possible that lenders will be hesitant to give approval, and if they do, they'll probably charge you fees or high-interest rates.
It is important to research all of your available choices for poor credit. It may be in your best interest to not look for a new loan.
The 6 Finest Debt Consolidation Loans in 2022 Available to Those with Poor Credit
- HIGHLY RECOMMENDED FOR BEING A WELL ESTABLISHED INSTITUTION: LendingClub
- HIGHLY RECOMMENDED FOR OFFERING SECURED LOANS: OneMain Financial
- HIGHLY RECOMMENDED FOR FAST FUNDING: Avant
- HIGHLY RECOMMENDED FOR SOCIAL PROOF: Upgrade
- HIGHLY RECOMMENDED CREDIT UNION: First Tech Federal Credit Union
- HIGHLY RECOMMENDED FOR ALTERNATIVE TO PAYDAY LOAN: Veridian Credit Union
HIGHLY RECOMMENDED FOR BEING A WELL ESTABLISHED INSTITUTION: LendingClub
LendingClub – a giant when it comes to the field of online lending. LendingClub does not give out a minimum score. However, you could stand the chance to be approved by the bank with almost any credit score.
What we liked about LendingClub
- Borrow as low as one thousand dollars.
What we did not like about LendingClub
- It takes a longer period of time to receive funds compared to other lenders.
Specifics Regarding a LendingClub Personal Loan
Range of Amounts for Loans: $1,000 - $40,000
Fixed APR: 6.34 percent - 35.89 percent
Loan Terms: Three or five-year loan terms
Time it Takes to Receive Funds: Between 24 and 48 hours
Minimum Credit Score Recommendation: 580 and above
HIGHLY RECOMMENDED FOR OFFERING SECURED LOANS: OneMain Financial
Borrowers with poor credit may find OneMain Financial to be a viable option because the company offers relatively low origination fees, loan amounts, and interest rates that are on the higher end. You can increase your chances of being approved by pledging collateral if you are facing some trouble getting approval for the loan. If you do not make your payments on time, you run the risk of losing the collateral you pledged for it.
OneMain Financial also has branches at physical locations. You may be asked to visit a physical branch of OneMain Financial in order to finish the application. However, if you do not live close to a OneMain Financial branch, you can conduct all of your business with the company entirely online.
What we liked about OneMain Financial
- The funding could be ready very quickly
What we did not like about OneMain Financial
- Costs of origination could be quite high.
Specifics Regarding a OneMain Financial Personal Loan
Range of Amounts for Loans: $1,500 - $20,000 (maximums in some states are substantially lower)
Fixed APR: 18 percent - 35.99 percent
Loan Terms: Two to five years
Fees Required: There is the possibility of an origination fee ranging from $25 to $400, equivalent to 1 percent to 10 percent, and no prepayment penalty.
Amount of Time it Takes to Receive Funds: One day during normal business hours.
Minimum Credit Score Recommendation: A credit score of at least 600 is recommended
HIGHLY RECOMMENDED FOR FAST FUNDING: Avant
Avant does not actually state a minimum credit score which is required for its online debt consolidation loans. However, applicants with credit scores in excess of 600 have got the best chance of being approved. When determining whether or not to grant you credit, Avant looks at several factors.
If you have poor credit, you will most likely be subject to Avant's most expensive interest rates. In addition to that, the one-time administration fee is an addition to the overall cost of the loan.
What we liked about Avant
- The funding could be ready very quickly.
What we did not like about Avant
- The flat administration fee increases the overall cost of borrowing.
Specifics Regarding an Avant Personal Loan
Range of Amounts for Loans: $2,000 - $35,000
Fixed APR: 9.95 percent - 35.99 percent
Loan Terms: Two to five years
Fees Required: There may be an administration fee that goes up to 4.75 percent of the total amount , but there will not be a prepayment penalty.
Amount of Time it Takes to Receive Funds: Possibility of funding on the following day of business.
Minimum Credit Score Recommendation: A credit score of at least 600 is recommended
HIGHLY RECOMMENDED FOR SOCIAL PROOF: Upgrade
Upgrade provides a large number of recent user reviews, which you can read if you are interested in learning what other people think of a particular lender. Although you must always approach reviews provided by a lender with a healthy dose of skepticism, the information provided here may be useful—even in cases where negative reviews appear to be conspicuously absent.
What we liked about Upgrade
- Gain perspective by learning from the experiences of others.
What we did not like about Upgrade
- The possibility of an APR higher than 30 percent
Specifics Regarding an Upgrade Personal Loan
Range of Amounts for Loans: $1,000 - $50,000
Fixed APR: 5.94 percent - 35.97 percent
Loan Terms: Either two or seven years
Fees Required: There is the possibility of an origination fee ranging from 2.9 percent to 8 percent, but there is no prepayment penalty.
Amount of Time it Takes to Receive Funds: Possibility of funding on the following business day.
Minimum Credit Score Recommendation: A score of 580 or higher is recommended
HIGHLY RECOMMENDED CREDIT UNION: First Tech Federal Credit Union
You'll be able to consolidate all types of loans through First Tech Federal Credit Union. You will be able to borrow money amounts as low as $500.
In order to qualify for a loan from First Tech Federal Credit Union, you will need to become a credit union member. This is true even if you do not already meet the requirements for membership. Applying for loans may cause your credit scores to drop temporarily.
What we liked about First Tech Federal Credit Union
- There are no upfront costs.
- You can have someone co-sign on your application.
What we did not like about First Tech Federal Credit Union
- A hard credit pull could impact your credit score.
Specifics Regarding a First Tech Federal Credit Union Personal Loan
Range of Amounts for Loans: $500 - $50,000
Fixed APR: 9.75 percent - 18.00 percent
Loan Terms: Two to seven years
Fees Required: No upfront fees, and there is no penalty for paying the loan off early.
Membership fee: If you wish to become a member of an organization, the membership fee ranges from $8 to $15.
Time it Takes to Receive Funds: Possible funding on the following day itself.
Minimum Credit Score Recommendation: A score of 580 or higher is recommended
HIGHLY RECOMMENDED FOR ALTERNATIVE TO PAYDAY LOAN: Veridian Credit Union
Payday Alternative Loans, also known as PALs, are available from Veridian Credit Union, and they could be an excellent choice for quickly clearing out smaller debts. The National Credit Union Administration (NCUA) enforces stringent rules that PALs must follow. These rules contribute to more effective cost management. It is still in your best interest to borrow as little money as possible.
When you consolidate your debt, you will initially receive just half of what the total funds are, but you will be responsible for repaying the entire loan amount. You will pay off your loan in full at the conclusion of the term and have additional money for unexpected expenses.
You'll need to join Veridian Credit Union and arrange for direct deposits into your bank account before your application can be considered. It is possible that all of this will take some time, particularly the wait for your wages to be sent by your employer. You are able to submit an application for a PAL once everything has been organized. You also cannot have any payday loans that are past due or in default.
You must sign up for an account on the Dwolla payment platform, open to customers all over the country, to become eligible for membership at the Veridian Credit Union.
What we liked about Veridian Credit Union
- Alternative to payday loan options for borrowers who need additional time to pay off their relatively modest loans
What we did not like about Veridian Credit Union
- You have to wait almost six months even before you are able to borrow money again if you find that you really need it.
Specifics Regarding a Veridian Credit Union Personal Loan
Range of Amounts for Loans: You could get up to $1,000 all at once (after paying the application fee, you'd have $975 available for spending)
Fixed APR: 19 percent to 21 percent (with autopay)
Loan Terms: Six months
Fees Required: The application fee is $25, and there is a prepayment penalty.
Amount of Time it Takes to Receive Funds: Not known, but you are only allowed to receive a single PAL every half a year.
Minimum Credit Score Recommendation: It is not relevant.
Compare the Different Lenders
LENDER
|
CATEGORY
|
APR
|
MINIMUM LOAN AMOUNT
|
MAXIMUM LOAN AMOUNT
|
REPAYMENT TERM
|
RECOMMENDED MINIMUM CREDIT SCORE
|
LendingClub
|
Well Established Institution |
6.34% to 35.89% |
$1,000 |
$40,000 |
3 to 5 years |
580+ |
OneMain Financial
|
Offering Secured Loans |
18.00% to 35.99% |
$1,500 |
$20,000 |
2 to 5 years |
600+ |
Avant
|
Fast Funding |
9.95% to 35.99% |
$2,000 |
$35,000 |
2 to 5 years |
600+ |
Upgrade
|
Social Proof |
5.94% to 35.97% |
$1,000 |
$50,000 |
2 to 7 years |
580+ |
First Tech Federal Credit Union
|
Credit Union |
9.75% to 18.00% |
$500 |
$50,000 |
2 to 7 years |
580+ |
Veridian Credit Union
|
Payday Loan Alternative |
19.00% to 21.00% |
Up to $1,000 available at once |
Up to 6 months |
N/A |
What Places Can Someone With Poor Credit Obtain a Loan to Consolidate Their Debts?
One can obtain debt consolidation loans from many different types of lenders, which includes credit unions, traditional banks, and even online lenders.
Since you can typically discuss your predicament with an officer at a small bank or credit union, these institutions might be a good choice for you. They might be highly likely to assist you when your credit score is low. It's also worthwhile to look into online lending options as well.
Get in touch with the credit union in your area and inquire about the available options.
What Kind of Credit Score Is Necessary to Obtain a Loan for Consolidating Debt?
There is not a specific credit score which will guarantee approval in every situation. Lenders consider a variety of criteria before deciding whether or not to grant approval. Even though a higher credit score is ideal, you shouldn't automatically assume that you won't be approved solely because of your low score.
When you have better credit, you have more options because some lenders will not work with people with poor credit. To qualify for a loan from the well-known online lender Prosper, one must have a credit score of a minimum of 640.
Is a Loan to Consolidate Debt the Right Choice for You?
When you are in a better financial position, it might be a good idea to consolidate your debts. To begin, calculate the total amount you will be responsible for paying off your debts. This should include both payments on a monthly basis and the total amount of interest. Calculators and other online and offline tools can provide you with those numbers.
A consolidation loan may be able to provide you with some relief. However, you should be careful that you may find yourself paying more. It's possible that the amount of the monthly payments will be the deciding factor.
You can get in touch with different lenders and inquire about the minimum credit score requirements they have by doing so. Each lender has its own unique criteria. Lenders will inform you of any strict minimum requirements if there are any. If you don't ask, you will never find out.
The Benefits and Drawbacks of Receiving a Debt Consolidation Loan
The advantages of receiving a debt consolidation loan
- Reduce the total amount of payments which you have to make on a monthly basis in order to make your life easier.
- Obtaining a debt that has a low-interest rate will help you save money on interest costs.
- Obtain a predetermined payoff date and a monthly payment that is fixed.
- Find a way out of the debt cycles caused by payday loans.
- Reduce the amount of your monthly payment during a few circumstances.
The disadvantages of receiving a debt consolidation loan
- The cost of your borrowing can immediately increase due to origination fees.
- When you stretch out your payments over a longer period, you might pay a lot more interest overall.
- Inquiries into your credit may negatively impact your scores.
- Most lenders will charge you higher interest rates if you have poor credit.
Other Financial Options Besides Debt Consolidation Loans
When you have poor credit, applying for a new loan can be challenging. It is not easy to get approval for your application, and even if you do, the rates offered to you may be quite high — possibly even higher than the rates you are currently paying. As a consequence of this, it is prudent to investigate each of the available options.
Collaborate With a Debt Relief Organization
Companies that specialize in debt settlement, debt consolidation, credit counseling, and debt management are all included under the umbrella term "debt relief companies," which is a generic term for these types of businesses. The vast majority of the time, these professionals will be able to assist you in determining whether or not consolidating your debt is the best choice for you.
Prepare a Game Plan for Your Payoff
Paying off your debts in their current form could be an approach that is relatively straightforward. When you can, make payments that are greater than the amount that is required at a minimum.
Make More Money
If there are opportunities for you to get more money, you should take full advantage.
Sell Stuff
In case you have things in your house that you can sell for money, you might want to think about doing so.
Spend less money
You might have already cut back as much as you are able to, but it's important to pay close attention to how your money is spent on a monthly basis.
Debt Management Plans
You might find the relief you're looking for through a debt management plan offered by a credit counseling agency.
Bankruptcy
In case you have exhausted all other possibilities, consulting with an attorney specializing in bankruptcy law may be worthwhile.
How We Determined That These Are the Best Debt Consolidation Loans for People with Poor Credit
We spend countless hours conducting research to identify the most suitable loans for each client's unique financial situation and credit history.
We also give preference to loan companies that are simple to get in touch with on a national scale and have a streamlined process for application that can be completed online and does not impact your credit score before you have made your final decision.
