Best debt consolidation loans for fair credit

A debt consolidation loan can help you save money on interest if you can get a lower interest rate than what you’re currently paying. But even if you can’t get a lower rate, debt consolidation can save you money in other ways by:

• Reducing monthly payments (lengthening your repayment term)
• Swapping a variable interest rate for a fixed one
• Swapping compound interest for simple interest

We’ll cover how to get the lowest interest rate you can with fair credit plus when it does and doesn’t make sense to refinance. We’ll also look at suitable alternatives if you can’t qualify for a debt consolidation loan.

Compare the best debt consolidation loans for fair credit

Best debt consolidation loans for fair credit

Fair credit is a FICO score between 580 and 669. Know your score before comparing lenders to get a sense of which lenders you may qualify with, as not all fair credit lenders offer loans across the entire fair credit spectrum. 

You should also prequalify with several lenders to get a sense of rates you might be eligible for. It won't hurt your credit and only takes a few minutes. Just note that when you formally apply, a hard credit check will be conducted which could ding your score. 

Methodology

We evaluated the best loans for good credit based on customer experience, minimum fixed rates, maximum loan amounts, funding times, loan terms, fees, discounts, loan uses, and other factors. Our team of experts gathered information from each lender's website, customer service department, directly from our partners, and via email support. Each data point was verified by a third party to make sure it was accurate and up to date.

Read our full lender rating methodology for more information.

When is a debt consolidation loan a good idea?

A debt consolidation loan is generally a good idea if it helps you save money on interest and you can afford the monthly payments. To find out if debt consolidation is right for you, prequalify with a few lenders to estimate your rate, and check the APR on your credit card statement or other high-interest loan statement. Use a debt consolidation calculator to determine your savings and payoff date. 

If you can’t qualify for a lower interest rate, here are a few scenarios in which refinancing debt with fair credit can still make sense:

You’re struggling to make monthly debt payments

Generally speaking, if you’re struggling to afford payments, debt consolidation can make sense even at a higher interest rate. This is because you can lengthen the amount of time you have to repay the debt, which means lower monthly payments.

The idea there is to avoid hurting your credit or defaulting on the loan which could cost much more in the long run than the higher interest costs spread out over a number of years.

You’re nervous about a variable interest rate

If you can afford your monthly payments, it could still make sense if you can qualify for a rate that’s close to what you have now in order to lock in a fixed rate. Most personal loans have fixed rates which means they won’t change (and your payment won’t change). Credit card interest rates, however, tend to be variable and have been on an upward trajectory since 2020. 

You want to avoid paying interest on interest

If you can’t pay off your cards each month, you’ll be charged interest on the remaining balance - including any interest that has accrued from prior months. When you switch to a personal loan, interest charges are set over the life of the loan and won’t increase as long as you make the required monthly payments. 

How to get a debt consolidation loan with fair credit

• Understand your personal finances: In addition to checking your credit, determine whether there’s room in your budget for debt repayment. If you’re struggling to make the minimum payments on your credit cards, a fair credit debt consolidation loan could help. But only if you avoid using your credit cards once they’re paid off (or pay them off in full every month). 
• Research lenders: Some lenders are more welcoming of fair credit borrowers than others. Research eligibility requirements, repayment term options, and lender reputation to narrow down your options. 
• Consider applying with a cosigner: If you have a friend or family member with good credit who is willing to back you up, look for lenders that allow cosigners or co-applicants. The lender will consider the credit profiles of both parties and may offer you a lower rate. Bear in mind, your cosigner or co-applicant will be responsible for the loan if you fail to repay. 
• Consider a secured loan: Some lenders offer lower rates for secured personal loans. These loans are secured by collateral, or an asset that the lender can take from you if you don’t repay, which makes the loan less risky for the lender. Lenders that offer secured personal loans include Upgrade, Best Egg, and OneMain Financial.
• Compare rates: Once you choose a handful of lenders you’re eligible for, it’s a good idea to prequalify with those lenders directly or via a loan marketplace. Prequalification allows you to get an estimate of your borrowing cost without damaging your credit.
• Compare lenders: Each lender estimate will show the annual percentage rate (APR), which you can use to compare loans. The APR includes interest charges and any upfront fees, like origination fees which can be as high as 12%. When choosing a lender, pay attention to the repayment term and monthly payment. Use a debt consolidation calculator to see if you’ll save money overall or how much more you’ll pay before continuing with the application. 
• Complete the application: Continue with the application for your selected loan offer. Most lenders conduct a hard credit check, which may cause a dip in your credit score, but your credit score will recover as you make responsible loan payments. The lender may require you to upload documents that prove your identity and income such as pay stubs and bank statements. Before signing the loan documents, be sure to check your final rate and read the loan agreement. 

What is a fair credit score?

A FICO score between 580 and 669 is considered a fair credit score. Most personal loan lenders use FICO scores when evaluating borrowers, but about 11% use VantageScore. A VantageScore of 601 to 660 indicates fair credit. If you’re not sure what your credit score is, you can access your free credit report at AnnualCreditReport.com. 

Average personal loan rates by credit score

Lenders determine your personal loan interest rate and origination fee based on your creditworthiness, which includes credit score, income, and other financial factors. Personal loan rates also depend on the repayment term and the lender you choose, so it’s a good idea to compare rates and terms from a few different lenders. 

APRs for personal loans can range from 6.99% up to 35.99% with repayment terms between two to seven years or more depending on the reason for your loan. 

To give you an idea of what to expect, the table below shows the average personal loan interest rates for three and five-year loans based on data from borrowers prequalifying on the Credible loan marketplace in July of 2024. 

How much of a personal loan can I get with a 600 credit score?

Lenders use your credit score not only to determine your interest rate, but also the loan amount you qualify for. The amount of cash you can get with fair credit depends on the lender and the other individual factors that make up your financial profile, including your income and current debt. If you already have a lot of existing debt relative to your income, the lender may not approve a request for a large loan due to concerns you won’t be able to afford repayment. 

Some fair credit lenders offer loan amounts up to $50,000, but that doesn’t mean you’ll be approved for that amount with a 600 credit score. The best way to find out how much of a personal loan you can get is to prequalify. 

Where can I get a debt consolidation loan?

You can get a debt consolidation loan from a bank, credit union, or online lender. Online lenders tend to be more accepting of fair credit borrowers than banks, but they don’t offer in-person customer support. If you already have a checking account with a financial institution, they might also offer a relationship discount, which is another consideration. 

Debt consolidation loan alternatives

A debt consolidation loan isn’t the only way to get out of debt, and it might not be the right choice for you if you’re overwhelmed by debt or unable to qualify for a low interest rate. 

Before taking steps to reduce your debt, it’s a good idea to evaluate your budget and look for areas where you can trim your expenses. If you earn a low income, you may qualify for government benefits, which can help free up income for debt repayment. Next, consider the following debt consolidation alternatives. 

The debt avalanche method

This DIY debt-reduction strategy is mathematically the fastest way to get out of debt without getting a lower interest rate. It involves making the minimum payments on all your debts and putting any extra income you have toward your highest-interest debt until it is paid off. After that, you move on to the debt with the next-highest interest rate. 

The debt snowball method

The debt snowball method is similar to the debt avalanche method, but instead of focusing your extra money on paying off highest-interest debt first, you target the smallest balance first. After you pay off your smallest debt, you move to the next smallest and so on until you're debt free. 

Balance transfer credit card

Another alternative to a debt consolidation loan is a credit card with a promotional 0% APR for balance transfers. Balance transfer credit cards work by offering 0% APR on balance transfers for an introductory period, such as 12 or 18 months, during which you can transfer debt from other credit cards to this new card without immediately incurring interest charges. After the promotional period is up, you'll pay the card's regular APR on your balance, so be sure to pay off as much of your debt as possible during the 0%-interest period to make the most of this strategy. 

Call your creditors

Some credit card issuers have formal hardship plans that can save you money, even if they don’t advertise these programs. Credit card companies may also be willing to waive late fees or even agree to a lower interest rate if you explain your financial situation, especially if you’ve made your minimum payments on time. 

Credit counseling

A credit counselor can enroll you in a debt management plan, which can help you get a lower monthly payment and save money on interest, all without damaging your credit. Each month during the plan, you make one payment to the credit counseling organization, which pays your creditors on your behalf. A credit counselor can also help you create a budget and teach you how to get a good credit score. Choose a nonprofit credit counseling agency approved by the U.S. Justice Department that meets your needs and charges low fees. 

Bankruptcy

Filing for bankruptcy may discharge some or all of your debts, but it causes severe damage to your credit. With a Chapter 7 bankruptcy, the court instructs you to liquidate your assets to pay your creditors, and most of your other debts are forgiven. It stays on your credit report for 10 years. 

With a Chapter 13 bankruptcy, the court creates a repayment plan, typically discarding most of the debt that remains after three or five years. It stays on your credit report for seven years. Each type of bankruptcy has different requirements, benefits, and drawbacks. 

While bankruptcy is typically considered a last resort, it might be the right solution if you’re in danger of losing your home or your minimum payments have become unmanageable. Upsolve is a free tool you can use to file bankruptcy on your own, but if your situation is complicated, you may need to hire an attorney. 

FAQ

How long does it take to get a debt consolidation loan?

You can typically get the funds from a debt consolidation loan within a week of approval. Some online lenders can issue the funds as soon as the same business day if you sign your loan documents within a specific time. If you opt for the lender to pay your creditors directly, it could take longer. Check with the lender so you know what to expect and can avoid late fees. 

How can you improve your credit score?

The best way to improve your credit score is to pay off as much debt as possible each month and always pay your bills on time. You may also need to wait for delinquencies and other negative marks to fall off your credit report, which can take up to seven years. If you always pay your rent and utilities on time, you may get a slight increase to your score with a tool like Experian Boost. 

How does debt consolidation affect your credit score?

Applying for a debt consolidation loan causes a dip in your credit score, but a strong record of on-time payments will most likely improve your credit score in the long run, unless you rack up more debt. However, missed or late payments on a debt consolidation loan can hurt your credit score. 

How long does debt consolidation stay on your credit report?

If you take out a personal loan for debt consolidation and the lender reports the loan to the credit bureaus, the account may remain on your credit report for up to 10 years, assuming it is paid as agreed. Negative information, such as a missed payment on a debt consolidation loan, will typically only stay on your credit report for seven years.