How To Get A Debt Consolidation Loan In 5 Steps (2024)

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If you’re paying off high-interest debt—especially credit card debt—you may be familiar with debt consolidation loans. You can use a debt consolidation loan to save money, get out of debt sooner or lower your monthly payment, but only if you know how to get approved for a debt consolidation loan. We’ll help you figure it out with this five-step process.


How To Get A Debt Consolidation Loan In 5 Steps (2)

Learn More How To Get A Debt Consolidation Loan In 5 Steps (3)

On Simple Debt Solutions Website

Up To $100,000

24 to 84 months


Simplified Payments

One of the main benefits of a debt consolidation is its simplicity. You only need to worry about one monthly payment, making budgeting and planning easier.

  • Minimum Requirement of $15,000 unsecured debt to consolidate.
  • Flexible repayment terms with your budget in mind
  • Reviewing offers won’t impact credit
  • Easy pre-approval process with instant decision
  • A+ rated by the BBB

How To Get a Consolidation Loan

Debt consolidation combines debts under one new loan or credit line, and debt consolidation loans can be a good idea if you’re struggling to manage multiple high-interest payments. More specifically, credit card consolidation loans may offer better interest rates with fixed payments that are easier to manage than fluctuating payments on credit cards.

If you’re thinking about consolidating debt, below are the steps for getting a consolidation loan.

1. Check Your Credit Score

The credit score you need for a personal loan varies by lender. In general, your chances of getting a debt consolidation loan are better if you have a good credit score, usually defined as 670 or above by FICO.

In some cases, your credit report may have errors that are bringing your score down, so first, you’ll want to check your credit report to make sure everything is correct. Then check your credit score to see where you stand. Several credit card issuers let you check your score for free.

If your credit score could use some work, see what you can do to fix it. Many lenders share personal loan requirements online, which can help you find a loan that fits your credit profile.

2. Make a Debt Consolidation Plan

Before you apply for a debt consolidation loan, it’s important to know what you want to get out of it. Obviously, you’re looking to simplify your debt payments by combining them into one loan. But here are some other common reasons people apply, along with what type of loan you should look for in that case:

  • You want to save money.Look for a loan with a lower rate so that more of your payment goes toward paying down the balance each month instead of the interest.
  • You want to get out of debt sooner.Look for the shortest loan term length with payments you can afford. Of course, you can always pay more toward your debt at any time, but choosing a shorter term length forces you to make those payments.
  • You want smaller monthly payments.Choose a longer term length. This will cost you more over the long run, but by spreading your payments out over time, each one will be smaller.

It’s a good idea to use a debt consolidation loan calculator to estimate what your options might cost you.

3. Find and Compare Debt Consolidation Loans

Now that you have an idea of what you’re looking for, you can target your search for lenders with loans that fit your needs. A wide range of consolidation loans exist, including debt consolidation loans for bad credit.

Check your rates and loan terms with as many debt consolidation loan lenders as possible. The more, the better since comparing options will help you find the best debt consolidation loans for which you can qualify.

There are many rate-shopping sites out there, and you can also check with individual lenders directly, such as credit unions, banks or online lenders. Many lender and loan marketplace websites have personal loan pre-qualification forms you can fill out to get personalized rate quotes with just a soft credit inquiry that won’t affect your credit.

4. Apply for Your Loan

The process of applying for a personal loan can be straightforward. To verify your income and identity, you’ll usually have to supply documents like your most recent pay stub, past tax returns, bank statements, or your personal ID, such as a copy of your driver’s license.

Most lenders only take a few minutes to review your application and qualify you, but if they need additional documents, it can take a few days. It’s a good idea to keep an eye out for any emails or phone calls from your lender during this time in case it needs anything. This can speed up the approval process so you can get your answer sooner.

5. Repay Your Loan

Once you’ve been approved, it’s a good time to enroll in autopay so you don’t run into any late payment fees or damage your credit from a late payment mark on your credit report.

It’s also a good time to keep yourself from going into debt in the future. Not everyone goes into debt through faults of their own (hello, medical bills and low wages). But if you could do a little better with saving more and spending less, it’s crucial to work on those areas so that you don’t have another pile of debt by the time you pay this loan off.

Tips for Managing Debt Consolidation Loans

It’s one thing to apply for and qualify for a debt consolidation loan, but it’s another thing to manage that loan responsibly. Here are five tips to help you understand and manage your new loan:

  • Understand personal loans.Most debt consolidation loans are personal loans. These are simple, lower-interest loans with a fixed term length. But if you don’t mind a bit more complexity, you could also consider a 0% intro APR credit card, a HELOC or a home equity loan.
  • Learn any additional loan features.Besides the APR, it’s also a good idea to look at other features lenders might offer. For example, some lenders pay off your old debt for you, so you don’t have to do that step yourself.
  • Continue paying your old loan until it’s clear.Once you or your new lender pays off your old debt, wait until you hear from your old lender that you have a zero balance. Payments might take a few days to process, after all. If you accidentally overpay, you’ll get the money back.
  • Set up autopay.Managing your loan is a lot easier when you enroll in autopay. This will ensure that you never miss a payment, leaving you free of late payment penalties, such as fees or negative marks on your credit report

Frequently Asked Questions (FAQs)

Is it a good idea to get a debt consolidation loan?

It depends. If you’re looking to get out of debt faster and save money in the process, getting a debt consolidation loan can help you do that if you can qualify for a lower rate. If you’re having trouble making your payments and don’t mind paying more over the long run, getting a debt consolidation loan with a longer term length can help you lower your monthly payments.

How do you qualify for a debt consolidation loan?

Each lender sets its own qualification requirements when it comes to debt consolidation loans. Your approval odds chances are better if you have a good credit score (at least 670) and a steady income.

Do consolidation loans hurt your credit score?

Applying for a debt consolidation loan (with a hard credit pull) can drop your score by up to five points for one year. If you miss payments, that can also hurt your credit score, too. But if you make all your payments on time (hint: sign up for autopay), you’ll generally see an increase in your credit score over time because your payment history is the most important factor that makes up your score.

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How To Get A Debt Consolidation Loan In 5 Steps (2024)


How To Get A Debt Consolidation Loan In 5 Steps? ›

Qualifying accounts usually include a range of loans (excluding home loans), credit cards, and retail accounts. What do I need to apply for a debt consolidation loan? A good credit record. A regular monthly income of at least R5 000.

What are the requirements for consolidation loan? ›

Qualifying accounts usually include a range of loans (excluding home loans), credit cards, and retail accounts. What do I need to apply for a debt consolidation loan? A good credit record. A regular monthly income of at least R5 000.

What is the fastest way to consolidate debt? ›

Debt consolidation options
  1. Balance transfer credit card. The best balance transfer cards often come with zero interest or a very low interest rate for an introductory period of up to 18 months. ...
  2. Home equity loan or home equity line of credit (HELOC) ...
  3. Debt consolidation loan. ...
  4. Peer-to-peer loan. ...
  5. Debt management plan.
Jan 19, 2024

What are the criteria for a debt consolidation loan? ›

Debt consolidation loans are essentially regular loans, meaning a lot of the same eligibility criteria apply. This might include: Your income—how much money you earn. Your credit rating—as an indication of your borrowing history.

What credit score do you need for a consolidation loan? ›

Every lender sets its own guidelines when it comes to minimum credit score requirements for debt consolidation loans. However, it's likely lenders will require a minimum score between 580 and 680.

Is it hard to get approved for debt consolidation? ›

If you have excellent credit, high income and are borrowing a relatively small amount of money, it can be easy to get approved for a debt consolidation loan. On the other hand, if you have poor credit, low income and are applying for a large loan, it may be difficult to get approved.

Why am I being denied for consolidation loan? ›

An inadequate income is one of the most common reasons you could be denied a debt consolidation loan. Lenders will compare your monthly earnings to your day-to-day expenses and debt payments. In doing so, they can determine how easily your can cover your financial commitments at your income level.

How do I put all my debt into one payment? ›

For most people, a debt consolidation loan involves taking out a single loan that pays off your existing debts. This could work out cheaper if you're offered a lower rate of interest overall, when comparing it to your other debts' interest rates.

What are the 4 things debt consolidation can do? ›

Loan debt consolidation is when you take out a new loan to pay off multiple debts. Four types of debt are commonly consolidated: credit card debt, student loan debt, medical debt and high-interest personal loan debt. You may reduce the overall cost of repayment by securing better terms and interest.

What is the best place to consolidate debt? ›

Best debt consolidation loans
  • SoFi: Best for fast funding.
  • Upgrade: Best for poor or thin credit.
  • Achieve: Best for quick approval decisions.
  • LendingClub: Best for co-borrowers.
  • Discover: Best for excellent credit.
  • Happy Money: Best for credit card consolidation.
  • LightStream: Best for large loans.

Can I get a loan to clear my debts? ›

Debt consolidation works by combining all your debt (credit cards accounts, store accounts, personal loans, and payday loans into a single loan. Usually, this debt consolidation loan will have a longer loan term, which brings monthly instalments down, making them more affordable.

Do Banks do debt consolidation loans? ›

Banks, credit unions, and installment loan lenders may offer debt consolidation loans. These loans convert many of your debts into one loan payment, simplifying how many payments you have to make. These offers also might be for lower interest rates than what you're currently paying.

Can I still use my credit card after debt consolidation? ›

If a credit card account remains open after you've paid it off through debt consolidation, you can still use it. However, running up another balance could make it difficult to pay off your debt consolidation account.

How long does it take to get approved for a consolidation loan? ›

The entire process typically takes between four and six weeks from the date your application is received. Before completing a consolidation application, carefully consider the following information to determine whether loan consolidation is the best option for you.

Can anyone get approved for debt consolidation? ›

In general, your chances of getting a debt consolidation loan are better if you have a good credit score, usually defined as 670 or above by FICO. In some cases, your credit report may have errors that are bringing your score down, so first, you'll want to check your credit report to make sure everything is correct.

Is it possible to get a loan with a 520 credit score? ›

It is 180 points away from being a “good” credit score, which many people use as a benchmark, and 120 points from being “fair.” A 520 credit score won't knock any lenders' socks off, but it shouldn't completely prevent you from being approved for a credit card or loan, either.

Can I get a debt consolidation loan without a job? ›

Yes, you can get a debt consolidation loan if you're unemployed, but you'll need proof of income from another source. You can use alternative income sources such as Social Security benefits, retirement accounts, alimony, or child support to qualify for a loan.

Do you have to put up collateral for a debt consolidation loan? ›

People often use unsecured personal loans, which means no collateral is needed, to consolidate credit card debt. They can also use debt consolidation to combine and pay off other types of debt, such as auto loans and other personal loans.

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