Yes, it can be challenging to find consolidation loans for bad credit when struggling with debt, but with some effort you may be able to do just that.
Here’s how to do debt consolidation with bad credit.

What is debt consolidation?
Debt consolidation involves borrowing money to pay off other debts. It streamlines the payment process since you only must make a single payment each month on the same date. Plus, if you qualify for a lower interest rate than what you are paying on existing debt, you could save money and eliminate your balance quicker.
How does debt consolidation affect my credit?
How to do debt consolidation with bad credit depends largely on your situation, but some elements apply to everyone. For example, not only do such loans have fixed monthly payments, they also have defined repayment periods. If you take out an 18-month loan and make payments as scheduled — and don’t create new debt — you can be debt free in 18 months.
You can also improve your credit score through a debt consolidation loan by decreasing your credit utilization ratio and improving your history of on-time payments.
Factors to consider before taking out a loan
Note that such loans have origination fees — upfront fees lenders charge to process your loan. The fee can range between 1% and 5% of the loan amount, so be sure you take out a loan big enough to cover your debts.
There may also be a lender pre-payment penalty if you pay off your loan before it is due. The amount can be either a percentage of the original loan or of the remaining balance. Be sure to read the fine print of your loan agreement.
You should also be aware that applications for a debt consolidation loan are subject to a hard credit inquiry, which will affect your score. If everything else in your credit history remains positive, your score will likely bounce back in a month or so.
What credit score do I need for a loan?
Most leading debt consolidation lenders require a credit score of at least 580. Even with poor credit, however, you can still find ways to consolidate your debt.
However, a potential problem is your new interest rate may be higher than the rate on your other loans or credit lines. Pay careful attention here, as it could defeat the purpose of doing the consolidation in the first place.
You can improve your chances for loan approval by taking a few months to pay down debt, using money that you usually spend on nonessential items.
Possible loan consolidation options
Start with a financial institution with which you have an existing relationship. You can also try other banks or credit unions. Consider pre-qualification for a personal loan too. The application process is easy and expeditious and will not affect your credit score. That way if it works, you can get the loan, if it doesn’t at least you won’t be farther in the bad credit hole. Remember, loan applications subtract points from your credit score, but requesting a pre-qualification does not.
There also are online options:
LendingTree lines people up with lenders who have products that suit the borrower’s needs. It requires a credit score of at least 500.
Another option, LendingPoint, is active in 34 states and the District of Columbia. It needs to see a minimum 585 credit score.
SoFi has no origination fees for consolidation loans. It usually requires a minimum score of 680, but it does accept co-signers.
OneMain Financial offers debt consolidation loans of up to $20,000 in 44 states. Be careful, though: it has relatively high interest rates and origination fees. Its minimum required credit score is undisclosed.
Now that you know how to do debt consolidation with bad credit, you should soon be well on your way to a better financial future,