How to Get a Debt Consolidation Loan in 5 Easy Steps

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How to Get a Consolidation Loan for Debt in just 5 steps
The steps for getting a debt consolidation loan include reviewing your credit score before comparing different options, then applying for an loan.


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Updated on January 10, 2023

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Steps



Steps





A will consolidate multiple high-interest debts into one payment. It will also help you pay off debts more quickly.
Here's how to get a debt consolidation loan in five steps.
1. Check your credit score

Check your credit score. Borrowers with good to excellent credit scores (690 to 890 credit score) have a higher chance to win approval and receive a lower interest rate on a consolidation loan.
In the ideal scenario, the consolidation loan is supposed to have a lower rate than the total interest rate on the other debts. A lower interest rate can reduce the overall amount of debt you have and can aid in getting out of debt quicker.
If you're a person with bad credit (300 up to 629 score) and need some time to get it, you may be eligible for a low-interest loan. Here's how:
Pay off late payments. Late payments are reported to credit bureaus after thirty days after the due date. This can drop your credit score as many as 100 points. If you're within the 30-day time frame for a debt payment, you have time to submit it.
Check for credit report errors. Errors that appear on your credit reports, for example, payments applied to the wrong debts or accounts incorrectly declared closed, may be affecting your credit score. Check your credit reports for free at AnnualCreditReport.com and dispute any mistakes you find.
Repay small debts. Debts owed account for 30 percent of your credit score. If you can pay down your high-interest credit cards before you consolidate. This can improve your credit score credit score, which will allow you to obtain a lower rate for the consolidation loan.

>> COMPARE:
2. List your debts and payments

Make a list of the debts you wish to consolidate such as credit cards, store credit cards, payday loans and other high-interest debts . Then add up the amount due. The consolidating loan amount to cover the sum of the obligations.
Take the sum of money you make each month to your debts. Then, check your financial plan for adjustments required to keep up payments on your debts. The new loan is likely to have a lower interest rate and a monthly payment that fits with your financial plan. Make a commitment to a repayment plan that is based on your budget.
Use a to see whether it is logical to combine.
3. Compare loan options

Shop for the loan that's right for you. Online lenders, credit unions and banks offer personal loans for debt consolidation.
They cater to borrowers from various credit levels. The majority of online lenders allow you to pre-qualify, so you can assess your own rates and terms without affecting your credit score.
are not-for-profit organizations that may provide lower rates to those with fair or bad credit. It is necessary to join to be eligible for the loan, and some credit unions may require a when you apply, which may temporarily harm your credit score.
work best for applicants with excellent or good credit. Customers with an existing banking relationship may have an easier process of qualifying and could receive advantages such as discounts on rates or access to higher loan amounts.

Look for lenders that offer direct payment to creditors, which simplifies the consolidation process. When the loan expires, the lender sends your loan funds to creditors for no additional cost.
Consider other features that some lenders provide, such as a rate discount for creating autopay or the ability to access your credit rating or financial education that is free.
>> MORE:
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APR 8.3-36.0%


Loan amount $1,000 - $40,000





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APR 7.99-29.99%


Amount of loan: $5,000 - $40,000





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APR 7.74-17.99%


Amount of loan $600-$50,000





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APR 8.49-35.97%


Amount of loan: $1,000 - $50,000





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APR 6.5-35.99 percent


The amount of the loan is $1,000.





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5.0 NerdWallet's rating is determined by our editorial team. The scoring formula is based on the factors we believe to be consumer-friendly, including impact to credit score, fees and rates, customer experience and ethical lending practices.


APR Rates are based on AutoPay. 6.99-23.99%


Amount of loan: $5,000 - $100,000





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5.0 NerdWallet's ratings are compiled by our editorial staff. The scoring formula takes into account the factors we believe to be friendly to consumers, such as the impact on credit score, rates and fees, customer experience and ethical lending practices.



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APR 8.49-35.97%


The amount of the loan is $1,000.





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APR 7.99-23.43%


Loan amount $5,000 - $100,000





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APR 6.5-35.99 Percent


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4.5 NerdWallet's ratings were determined by our editorial staff. The scoring formula considers the factors we believe to be consumer-friendly, including the impact on credit scores rates and fees, customer experience and ethical lending practices.


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Amount of loan $2,000 - $50,000





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4.5 NerdWallet's ratings are compiled by our editorial team. The scoring formula takes into account aspects we consider to be beneficial to consumers, including impact to credit score rates and fees, customer service and responsible lending practices.


APR 11.69-35.93%


Amount of loan: $1,000 - $50,000





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5.0 NerdWallet's ratings are determined by our editorial team. The scoring formula takes into account factors we consider to be beneficial to consumers, including the impact on credit scores, rates and fees, customer experience and responsible lending practices.


APR 6.99-24.99%


Loan amount $2,500 - $35,000





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4.5 NerdWallet's ratings are compiled by our editorial staff. The scoring algorithm takes into consideration the factors we believe to be friendly to consumers, such as the impact on credit score, rates and fees, customer experience and ethical lending practices.



4.5 NerdWallet's ratings are compiled by our editorial staff. The scoring formula considers factors we consider to be beneficial to the consumer, such as impact on credit score, fees and rates as well as the customer's experience and ethical lending practices.


APR 6.5-35.99 Percent


Amount of loan: $1,000 - $50,000





on Upstart





On Achieving



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5.0 NerdWallet's rating is determined by our editorial team. The scoring algorithm takes into consideration factors we consider to be consumer-friendly, including impact to credit score, rates and fees as well as the customer's experience and responsible lending practices.



5.0 NerdWallet's ratings are determined by our editorial staff. The scoring formula is based on aspects we consider to be a good choice for consumers, such as the impact on credit scores rate and fees customers' experience, and ethical lending practices.


APR 7.99-29.99%


Amount of loan: $5,000 - $50,000





on Achieve





on SoFi



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5.0 NerdWallet's ratings are determined by our editorial staff. The scoring formula takes into account aspects we consider to be beneficial to consumers, such as impact to credit score, fees and rates as well as the customer's experience and ethical lending practices.



5.0 NerdWallet's ratings are compiled by our editorial staff. The scoring formula takes into account factors we consider to be friendly to consumers, such as the impact on credit score, rates and fees as well as the customer's experience and responsible lending practices.


APR 7.99-23.43%


Amount of loan: $5,000 - $100,000





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4.5 NerdWallet's ratings were determined by our editorial staff. The scoring formula considers factors we consider to be consumer-friendly, including impact on credit score, fees and rates customers' experience, and responsible lending practices.



4.5 NerdWallet's ratings are compiled by our editorial staff. The scoring formula takes into account the factors we believe to be consumer-friendly, including impact to credit score, fees and rates customers' experience, and ethical lending practices.


APR 8.99-35.99%


Amount of loan $2,000 - $50,000





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5.0 NerdWallet's ratings are compiled by our editorial team. The scoring formula takes into account the factors we believe to be beneficial to the consumer, including the impact on credit score, fees and rates, customer experience and responsible lending practices.


APR Rates are based on AutoPay. 6.99-23.99%


Amount of loan: $5,000 - $100,000





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on SoFi



SoFi
5.0 NerdWallet's ratings are compiled by our editorial team. The scoring formula is based on the factors we believe to be beneficial to the consumer, including the impact on credit score, fees and rates customers' experience, and ethical lending practices.



5.0 NerdWallet's ratings are compiled by our editorial staff. The scoring formula is based on aspects we consider to be consumer-friendly, including the impact on credit score, rates and fees, customer experience and ethical lending practices.


APR 7.99-23.43%


Amount of loan: $5,000 - $100,000





on SoFi





on Universal Credit



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4.5 NerdWallet's ratings were determined by our editorial staff. The scoring formula considers factors we consider to be a good choice for consumers, such as impact to credit score, rates and fees, customer experience and ethical lending practices.



4.5 NerdWallet's ratings were determined by our editorial team. The scoring algorithm takes into consideration the factors we believe to be friendly to consumers, such as the impact on credit score, rates and fees customers' experience, and responsible lending practices.


APR 11.69-35.93%


The amount of the loan is $1,000.





on Universal Credit





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5.0 NerdWallet's rating is determined by our editorial team. The scoring algorithm takes into consideration factors we consider to be beneficial to consumers, including the impact on credit score, rates and fees, customer service and ethical lending practices.


APR 8.3-36.0%


Amount of loan: $1,000 - $40,000





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4.5 NerdWallet's ratings are determined by our editorial team. The scoring algorithm takes into consideration the factors we believe to be consumer-friendly, including impact to credit score, rates and fees customers' experience, and ethical lending practices.



4.5 NerdWallet's ratings are compiled by our editorial team. The scoring formula takes into account aspects we believe are consumer-friendly, including impact to credit score, rates and fees as well as the customer's experience and ethical lending practices.


APR 6.5-35.99 percent


Loan amount $1,000 - $50,000





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Do you want to consolidate debt? See if you pre-qualify for a debt consolidation loan.
Answer a few simple questions to get personalized results by our lenders.


Loan amount
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4. Apply for a loan

If you're ready collect documents like evidence of identity or address proof, as well as income verification.
Take the time to read your loan documents fine print. Look for any , which could impact the total cost of the loan and verify that the lender is reporting on-time payment to three primary credit bureaus, which can help build your credit.
If you're not meeting the lender's criteria, think about including a credit score of good credit to your application. This can help you get a loan that you would not be eligible for by yourself.
>> COMPARE:
5. The loan and make payments

Now that you've found and were approved for the loan you're seeking There's a crucial remaining step.
If the lender offers direct payment, it will split the loan proceeds among your creditors, and pay off the old loans. Check your accounts for an empty balance, or contact each creditor to verify that the accounts are paid off.
If the lender doesn't pay you back, then you'll repay each debt using the money that's transferred into your bank account. Take action immediately to avoid paying additional interest on old debts as well as to avoid the temptation to use the loan money elsewhere.
In the 30 days of receiving your debt consolidation loan, make your first payment.
>> MORE:


Authors' Bios Steve Nicastro is a former NerdWallet expert in personal loans and small business. Its work was featured by The New York Times and MarketWatch.


Jackie Veling covers personal loans for NerdWallet.







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