11 Best Debt Consolidation Loans for Fair Credit of November 2024

We researched to find the best personal loans to use for consolidating debt with a fair credit score, and Upgrade is our pick based on its competitive interest rates, discounts and low credit score minimum. Other lenders to consider include Universal Credit, Discover and OneMain Financial.

If you have one or more high-interest debts, consolidating that debt with a new personal loan can be a good idea. Debt consolidation loans offer fixed rates (unlike credit cards) and monthly payments. Plus, they can help you lower your monthly payments, save on interest, and/or boost your credit. If you have fair credit, you aren’t likely to qualify for the best rates on debt consolidation loans. However, that doesn’t mean this debt payoff strategy isn’t worth pursuing.

You may qualify for lower rates than what you’re currently paying even with a fair credit score (a FICO score between 580 and 669). But not all lenders work with fair-credit borrowers. 

Why you can trust Credible

The Credible editorial team is independent and unbiased, which means that partners do not influence our editorial content. To help you find the best fair-credit debt consolidation personal loan for your situation, we analyzed over one thousand personal loan data points. Using data-driven methodologies, we scored criteria that are important to you. This approach allows us to objectively rank personal loans. To learn more, read our methodology below.

Best debt consolidation loans for fair credit

If you have fair credit — considered a FICO score between 580 and 669 — you may be able to qualify for a debt consolidation loan from certain lenders. Here are Credible's partner lenders that offer fair credit personal loans for debt consolidation:

Methodology

Credible evaluated the best debt consolidation personal loans for fair credit based on customer experience, minimum and maximum interest rates, origination fees, minimum and maximum loan amounts, minimum and maximum loan terms, discounts, the availability of secured loans, whether cosigners are accepted, and more. Special consideration was given to lenders that offer rate discounts for direct payments to creditors, as well as those who serve a range of credit profiles. To assign star ratings, we used the following metrics and weightings: 

• Rates and fees: 18%
• Loan terms: 18%
• Customer experience: 17%
• Eligibility: 14%
• Customer satisfaction: 10%
• Efficiency: 10%
• Options for poor credit and no credit: 9%
• Discounts: 4%

To select specifically for the best fair-credit debt consolidation loans, we chose the highest rated lenders and eliminated those that require FICO credit scores of 670 or higher on applications. Lenders with lower rates and fees, broader loan amount and repayment term ranges, more perks and discounts, and greater nationwide availability ranked highest.

Credible's 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.

Learn more about how Credible rates lenders by exploring our Personal Loans Lender Rating Methodology.

What is a debt consolidation loan?

A debt consolidation loan lets you combine multiple debts into one, typically leaving you with one payment to manage — and, ideally, a lower interest rate overall. You can use a debt consolidation loan to consolidate and pay off various types of debt, including credit card debt, personal loans, medical bills, and more.

There are several types of debt consolidation loans, including home equity loans and 0% APR balance transfer credit cards, but personal loans are one of the best options for many borrowers. This is because personal loans offer longer repayment terms for lower monthly payments, fixed annual percentage rates (APRs), and relatively low fees. They’re well suited to debt consolidation because they’re often available in large loan amounts, giving you a better chance of consolidating most or all of your debt into one loan (if you qualify).

Personal loan for debt consolidation

You’ll receive a personal loan for debt consolidation as a lump sum after approval and can use the funds to repay your creditors. You may receive funds as soon as the day you’re approved. Many personal loans are unsecured, meaning they don't require collateral. You might also get a discount for having the lender send the loan funds directly to your creditors.

Here are a few other common features of personal loans:

• APR range: 7% to 36%
• Loan amounts: $1,000 to $50,000 (or more)
• Repayment terms: One to seven years
• Fees: Origination fees, late fees, insufficient funds fees

Approval odds and rates depend on your credit profile, debt, and income. With fair credit, you're likely to be charged an origination fee, which can be up to 12% of the loan amount, depending on the lender and your credit.

Origination fees are deducted from the loan amount, reducing the amount available to pay off your debt.

How to get a debt consolidation loan with fair credit

If you're ready to get a debt consolidation loan with fair credit, follow these four steps:

1. Check your credit. When you apply for a personal loan for debt consolidation, the lender will review your credit to determine your creditworthiness. It's a good idea to check your credit before you apply to see where you stand. You can use Credible's credit monitoring tool to review your credit reports for free. If you find any errors, dispute them with the appropriate credit bureaus to potentially boost your credit score.
2. Compare lenders and choose a loan option. Be sure to compare as many lenders as you can to find the right loan for you. Consider not only interest rates but also credit requirements, repayment terms, and any fees charged by the lender. Afterward, pick the loan option that best suits your needs.
3. Complete the application. Once you've chosen a lender, you'll need to fill out a full application and submit any required documentation, such as tax returns or pay stubs.
4. Get your funds. If you're approved, review the loan agreement and sign if everything looks as expected. The time to fund for personal loans is usually about one week — though some lenders will fund loans as soon as the same or next business day after approval. You might also have the option to have the funds sent directly to your creditors, depending on the lender.

Do debt consolidation loans hurt your credit score?

When you apply for a new loan, the lender will typically perform a hard credit check to determine your creditworthiness. This could cause a slight dip in your credit score — though this is usually only temporary, and your score will likely bounce back within a few months.

Having a debt consolidation loan could help your credit if you make all of your payments on time and pay off debt. In general, these positive effects on your credit score outweigh any initial negative impact. However, falling behind on payments or defaulting on any loan can hurt your credit score and cause lasting damage that takes much longer to recover from than a small application ding. Lowering the average age of your accounts can also bring your score down, especially if some of the balances you intend to repay were very old, and the same may be true of decreasing your credit mix.

What is a fair credit score?

In general, a fair credit score is considered to be a FICO score between 580 and 669. Here are the credit score ranges as defined by FICO.

Personal loan interest rates by credit score

Your credit score plays a large role in deciding what interest rate you qualify for, along with your repayment term and the lender itself. In general, the better your credit, the lower the interest rate you’ll likely get — which means you’ll pay less in interest over the life of your loan.

Here are the average personal loan interest rates by credit score offered to borrowers who recently used Credible to take out a three-year personal loan:

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

Personal loans typically range from $600 to $50,000 or $100,000, depending on the lender. However, if you’re looking to get a personal loan with a 600 credit score (or lower), keep in mind that your credit score, repayment term, and other factors will affect how much you’ll actually be able to borrow.

If you’re struggling to get approved for a personal loan, applying with a cosigner could improve your chances. While most lenders don’t allow cosigners on personal loans, some do.

Having a cosigner might also help you qualify for either a lower interest rate or a higher loan amount — though keep in mind that if you can’t make your payments, your cosigner will be on the hook for repaying the loan.

Before taking out a personal loan for debt consolidation, remember to consider as many lenders as possible to find a loan that works for you.

How to boost your credit score

While you might qualify for a debt consolidation loan with fair credit, these loans often come with higher interest rates compared to good credit loans. If you’d like to get approved for better rates in the future, it could be a good idea to spend some time building your credit.

Here are a few ways to potentially boost your credit score:

• Pay all of your bills on time: Payment history makes up the biggest part of your credit score — 35%. Making on-time payments could help you build a positive payment history while improving your credit score.
• Pay down credit card balances: Your credit utilization — or the amount of debt you owe compared to your credit limits or available credit — makes up 30% of your credit score. Paying down credit cards and other debts could help reduce your credit utilization and boost your score.
• Become an authorized user: A simple way to help build credit, especially if you don’t have a credit history yet, is to become an authorized user on a credit card account. This can help build your credit without you even having to use the card.

Raising your credit score could help you save money in the long run on future loans, as you’ll have a better chance of qualifying for lower rates.

Say you had a 600 credit score and took out a $20,000 personal loan with a three-year term. If you qualified for the average rate of 29.26%, you’d end up paying $10,274 in interest over the life of the loan.

But if you were able to boost your score to 680 and got approved for the average 17.96% APR, you’d pay only $6,015 in interest.

Read More:

• How To Get Approved for a Personal Loan
• How Debt Consolidation Helps Your Credit
• Best Debt Consolidation Loans for Bad Credit
• Best Personal Loans for Fair Credit
• Best Personal Loans for Good Credit
• Best Personal Loans for Excellent Credit