Can Individuals with Bad Credit Get a Debt Consolidation Loan?

Dealing with credit is tough and becomes even more challenging if you struggle with credit.

A bad credit score affects your viability for personal loans, making it hard to qualify for lower-interest loans. It also becomes challenging to get approval for debt consolidation loans.

Read on to learn how you can clear your debt sooner if you have bad credit using consolidation loans.

Can You Get Debt Consolidation with Bad Credit?

Debt consolidation provides the best approach to clear your debts regardless of your credit score. Several lenders like Symple Lending are open to lending bad-credit individuals with debt consolidation loans.

You have higher chances with secured loans than personal loans because the lender requires collateral to reduce risk exposure.

Getting a debt consolidation loan means you combine all unsecured debts, allowing you to make one low-interest monthly payment. Securing a loan with bad credit is challenging since most lenders consider such individuals high-risk.

Even after securing it, you’ll still need to provide collateral, pay high interest and reassure them that you will pay. Talk to a Symple Lending expert to understand your best options for financial freedom.

What Credit Score Do I Need to Get a Debt Consolidation Loan?

You need a credit score of at least 580 on the FICO scale to get approval for a debt consolidation loan. It doesn’t mean having a lower score disqualifies you from a loan application. You’ll just have to pay higher interest or a shorter payment period.

Mostly, it is not the best idea for bad-credit holders to get a debt consolidation loan as it digs them deeper into debt. You may end up paying more than what you had to pay before the loan approval.

It would be wise to consult with different lenders before settling to get a loan that makes sense for your financial situation.

Where Can I Get a Debt Consolidation Loan with Bad Credit?

Not all consolidation loans work in your best interest; some lenders are out to exploit their borrowers. The best place to get your loan is from mainstream lenders like banks, despite being strict and picky.

The following are lenders individuals with bad credit can consider for debt consolidation loans:

Online Lenders

There are online lenders dedicated to offering debt consolidation loans to people with bad credit. These businesses pay your debts, and you’ll repay the loan through fixed monthly installments for up to 5 years.

Payday Lenders

Although most financial gurus advise against getting loans from payday lenders, they can help clear your debt. These lenders offer short-term loans with exceedingly high-interest rates.

Credit Unions and Banks

Banks also offer debt consolidation loans to bad credit holders, but be ready for rejection. On the other hand, credit unions offer more flexible packages but only for members. These institutions have strict rules and are heavily regulated, so it’s not easy to qualify with bad credit.

Bad credit is not reason enough for you not to apply for a debt consolidation loan if needed. There are dozens of lenders ready to provide financial assistance in clearing your debt, but you’ll have to be prepared for the high-interest rates and harsh penalties.