Consolidating loans | Online For Bad Credit | Guaranteed Approval

Consolidating Loans For Bad Credit – Guaranteed Online Approval

A FICO score below 669 is generally considered to be in the fair-to-poor range. If you happen to have such a score and significant amounts of debt, then it makes sense to think about a debt consolidation loan.

Do not let your bad credit discourage you. There are lenders who specialize in debt consolidation loans for bad credit and they look at other factors beyond just the credit score.

One of the most important things to consider when opting for a consolidation loan is the interest rate on that loan. It has to be lower than the interest rate on your debt.

That is the only way you can repay all the outstanding debts quickly and cheaply. Therefore, you must shop around and find the best rates.

Online lenders and credit unions offer debt consolidation loans. You can also use Pluslend’s debt calculator to find out if debt consolidation makes sense or get in touch with us to discuss.


How to get debt consolidation loans for bad credit 

If you are having a tough time with multiple debts and want to figure a way out of your troubles, then you can follow the process outlined below. It may improve your chances of finding the right consolidation loan.

Check your credit score 

The first thing you need to do is check your credit score. You can order one free credit report from any of the big three credit bureaus. Checking your credit score is important because it is the most significant indicator of your creditworthiness. Important aspects like interest rate are determined by the lender via your credit score.

There are rare occasions when credit reports might have an error which can lead to a lower credit score. If you do find any discrepancy, bring it up and get it corrected.

It could ultimately save you on the interest cost. Once you find out what your credit score is, you will be better able to shortlist loan providers with who you can work. Many lenders list the credit score range that they work with.


Research multiple lenders 

Once you have your credit score, start looking up debt consolidation loan providers. It is always a good idea to learn about the offerings of multiple providers so that you can compare and get the best possible option.

When researching consolidation loan options, look at the interest rate, the fees or charges, the repayment terms, the level of customer service, and the overall reputation for each option that you shortlist.

Make sure you read the fine print because the devil is in the details. The research might seem time-consuming, but it is essential and can save you a lot of money in the long run.


Consider putting up collateral 

A debt consolidation loan for bad credit is generally unsecured and does not involve putting up any collateral. However, there are few providers who work with bad credit borrowers and offer unsecured loans.

If you are having a tough time getting approved for an unsecured loan, then consider going for a secured loan instead.

It is true that when going for a secured loan, you will have to put up an asset like a vehicle, home, or any other investment as collateral.

However, your chances of getting a loan may improve since the risk for the lender comes down. The value of the collateral would be enough to cover the loan amount in the event of a default. Plus, with a secured loan, the interest rate might be lower as well.


Improve your credit if nothing works out 

If you cannot get a secured or an unsecured consolidation loan, then there is no option but to wait it out. You can use that time to work towards improving your credit score.

Make some tough decisions and realign your cash flows so that you can start to pay off your debts. Pay your bills on time and lower your credit card utilization rate.

The idea is to build your credit by demonstrating responsible financial behavior. Over time, things might improve and you may be able to get approved for a loan eventually. Or even better, you might not need a loan.


Who to approach for a debt consolidation loan? 

If you search for debt consolidation loans, you will find plenty of results. There are many businesses and institutions that provide such loans.

Sifting through all the options can be overwhelming. Therefore, to make life easier for you, the following is a list of providers where you can begin your search:

Local banks and neighborhood credit unions 

Local banks and credit unions tend to value relationships more than large institutions. Therefore, even though local banks and credit unions look at credit scores before lending out personal loans, they may cut you some slack if your credit score isn’t in great shape.

Much depends on the kind of relationship that you have developed with the local institution and how long that relationship has been active.

If you do have an existing relationship with a local bank or credit union, then feel free to visit the branch and speak to a loan officer. Inquire about your eligibility for a personal loan and get to know about the terms and conditions.

It is quite possible that your neighborhood institution may consider factors like your financial history, your relationship with the institution, and your personal situation. Aspects other than a low credit score might be considered.


Online loan providers 

There are plenty of online lenders and loan providers that you will find if you run a simple search. The key with online players is to find out information about their reputation and credibility.

It is also important that those online lenders should be willing to work with a borrower who has a low credit score.

It is a good idea to call or reach out to online loan providers that you find to be credible. When you call, observe what the customer service is like and how helpful each lender is.

Online providers tend to have higher interest rates, but they also are more likely to work with bad credit borrowers. Plus, the whole online process moves very quickly. It is very convenient to fill out a loan request form and get an instant decision.

The money also gets disbursed quickly if you accept the loan offer. There is no need to step out of your home.

Another thing to be careful about is the existence of any extra fees or charges. Sometimes, there might be a loan origination fee as well which can add to your cost.

Pluslend has worked with borrowers of all credit profiles and our friendly customer service executives will answer any questions that you have. Pluslend also has some of the most competitive interest rates in the industry and all the charges/fees are transparently disclosed.


Other options besides debt consolidation loans 

If you are having trouble getting approved for a consolidation loan for bad credit or if you are not comfortable with the way the consolidation loan works, then consider the following alternatives. They might end up being cheaper for you or more feasible, depending on your particular situation.

DIY actions 

There are a few things that you can do without signing any new loan agreement. Firstly, you can re-look at your income and expenses. Either cut down the expenses by making lifestyle changes or find a second job/part-time gig.                                      Whatever you can do to generate savings and start paying off your existing debts needs to be done.

Secondly, you can consider moving around your monthly due dates so that all the repayments do not fall on the same day. For some, having staggered dates works because it gives them time to arrange the money for repayment.

For some, having repayments scheduled on certain dates makes it easier to keep track of them. While shifting the due dates isn’t exactly debt consolidation, it can help manage the cash flows.

Thirdly, you can take the initiative and speak directly with your lender about your difficult situation. Explain to them why it is challenging to keep up with the current loan terms and negotiate a lower interest rate or a longer-term.

Whatever you can do to lower the monthly repayment amount should be discussed and negotiated. There are times when lenders consider such requests.


Debt management program 

You can consider joining a debt management program. In this program, a non-profit credit counseling agency builds a repayment plan for you in which all your debt repayments are replaced with one single payment. You simply have to make that payment to the counseling agency that then pays the respective payments to each lender of yours.

Not only does a debt management program consolidate your payments into one simple payment, but it also helps restructure your debts so that your monthly payment is a lower and more manageable amount. The non-profit credit counseling agency does the negotiating on your behalf.

Debt management programs are generally three to five years in duration. Management fees charged for such programs range from $20 to $50 per month.

You must also note that participating in a debt management program results in a notification about it on your credit report. So, if you apply for a loan in the future, the lender will be able to see in your financial history that you were enrolled in a debt management program.

The lender may, therefore, choose not to lend. However, that is just a possibility and the actual decision-making varies from lender to lender.


Monetize your home equity 

If you happen to own a home on which you have repaid back some portion of your mortgage, then you would have built up some equity in that property.

That equity can be used to raise funds. While borrowing against home equity isn’t exactly debt consolidation, it can give you access to funds and it can also lower your credit score because that loan will be considered to be secure.

The risk with this option is that you can lose your home to a foreclosure if you do not keep up with the repayment of the home equity loan. Therefore, this option should be selected only if you have nothing else going for you or if you are confident that you will have enough regular income to make the repayments.

Besides opting for a home equity loan, you can also consider a home equity line of credit (HELOC). A line of credit is a facility through which you borrow only the amount that you need at a particular time.

It is different from borrowing the complete amount as a lump sum. The line of credit is secured by the value of the home equity. It is similar to a credit card and has a maximum limit up to which you can draw the funds. The interest rate is also fixed. Overall, HELOC is more flexible for the borrower than a conventional consolidation loan.

Lastly, you can opt for what is known as a cash-out refinance. Through this method, you basically take out a new mortgage if the value of your home has gone up. This new mortgage will be for a higher amount than your existing mortgage. You then pay off the existing mortgage and keep the balance cash that is left over to pay off your debts.


What if your debt situation is out of control? 

If you are facing a really tough time with your debts and you simply cannot afford your monthly payments, then you have to consider some serious options.

If the above-mentioned alternatives to debt consolidation do not work for you, and if you have tried everything else possible and yet cannot get any relief, then consider the following “less-than-ideal” options:

Engage the services of a credit counselor 

As pointed out in the section about debt management plans above, credit counseling agencies are an intermediary between you and your creditors.

They help lower your monthly payments and consolidate them into a single payment. Credit counselors can also help you make sense of your credit report. They will offer you advice on how you can improve your scores and follow conservative financial practices.

Some of the credit counseling agencies offer services free-of-charge and many are non-profits. Credit counselors tend to successfully help borrowers because they have relationships with many creditors who they have been working with on behalf of many other borrowers. Credit counseling agencies also have contracts with some creditors.


Work with a debt settlement company

If your options are running out, then consider working with a debt settlement company to settle your debts. This company will negotiate with your creditors on your behalf and try to come to a settlement.  Some well-known companies include National Debt Relief and Freedom Debt Relief.

However, debt settlement has its fair share of risks. Firstly, debt settlement companies may insist on you depositing a substantial amount of money into an account before the company even begins negotiations with your creditors.

That is risky business considering the fact that you are already in a tough position financially and will have to route the money meant for repayments to the account for debt settlement.

Second, debt settlement companies do not guarantee that the negotiations with your creditors will be successful. The settlement might fail but you will still have to pay the fee for the services of the debt settlement company. So, in the worst case, you might default and lose money that is used to pay the fees.

Thirdly, debt settlement does not protect your credit report from negative notations. If you already defaulted on your debt before you engage a debt settlement company, then the default will still show up on your credit report. If not, then you still have to live with the notations for up to seven years.

When you have no other option and are staring at bankruptcy, you might want to think about the pros and cons of working with a debt settlement company.



This is the ultimate last resort option. When nothing works out for you, including debt settlement, then you have no option but to file for bankruptcy. This option will be painful as you will have to liquidate some of your assets to clear your debts or get on some kind of a repayment plan.

Bankruptcy goes not clear all your debts. Some debt like student loans or child support debt can remain untouched by bankruptcy and that is something you will have to face one way or another.

Bankruptcy is a serious event and will affect your credit score. It will likely stay on your credit report for seven to ten years. Requesting another loan can take a decade or more.

Bankruptcy is designed to provide borrowers with a second chance. It allows you to rebuild your credit and eventually recover from debt problems. Bankruptcy is a legal proceeding and it is advisable to consult a bankruptcy attorney throughout the entire process.


Beware of aggressive lenders and predatory practices 

Debt consolidation loans are risky for the lender and borrowers are often desperate to get one. Therefore, some lenders can try to take advantage of the situation by engaging in predatory practices. Things to watch out for are exorbitant interest rates and unrealistic loan terms. Borrowers with low credit scores are especially vulnerable to such lending.

There are companies that charge three-digit APRs with some going even as high as 400 percent. Opting for such expensive loans can be completely counterproductive because the repayments will be unaffordable.

Such loans can push you into even deeper debt than what you initially had. The whole point of going for a consolidation loan for bad credit is to ease the financial stress. Predatory lending will worsen the situation. So, stay away from any lender that you have doubts about.



Being in a debt trap can be quite stressful. Having bad credit while tackling debt problems is even more challenging. However, do not let the stress get to you. There may be occasions when all your options run out and you face bankruptcy. However, take your time to select the right option.

Debt consolidation can bail you out once or twice. However, it is not a permanent solution. The focus should be on how you got into debt trouble in the first place.

Think about your financial habits in general and work towards inculcating the right attitude towards money. Curb the overspending and start rebuilding. Make it a mission to never get into any debt trouble.

If you do decide to go for a loan, do not simply apply everywhere and jump on whatever offer comes your way. The lender could be following predatory practices which could make matters worse. Pluslend follows conservative practices and works in a transparent manner. Feel free to reach out to us to explore how we can help you.



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Personal Finance Writer at Consolidation Now | Website

Tom Harold is a personal finance and insurance writer who has more than 10 years of experience in covering commercial and personal insurance options. He is also determined to beat her brother, who is a financial advisor with intimate knowledge of the field of personal finance. He devotes time researching the latest rates and rules.