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You might not think debt consolidation with bad credit is a realistic option. But for many people with low credit scores, debt consolidation loans might help improve their situation.

Bad credit doesn’t mean you don’t have any options. But it does mean your choices are limited. Let’s take a look at how to find debt consolidation loans with bad credit.

What is debt consolidation?

For anyone with multiple loans or lines of credit, debt consolidation offers a way to bundle all debt into one loan. Basically, you pay off your old loans with a new one. The benefits of this method are that it includes less paperwork and possibly lower interest rates.

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Before debt consolidation, get your credit score

If you don’t know your credit score, get the numbers before you consolidate. This is important as it helps you understand your situation in detail. Also, it might save you time since you won’t be asking for loan consolidation from places that require high credit scores. You can get a free, safe credit score report from

What about debt consolidation services?

You might find companies that offer debt consolidation services, but beware. Some of these services promise low monthly payments, but interest rates can be high. Also, they might mix high service fees into the deal. Make sure you read the fine print and know exactly how much interest and fees are charged.

Also make sure the service is not debt settlement. Debt settlement occurs when there is a negotiation with the lenders to accept payment less than what is owed. While this might be an option to consider, it can also trigger a tax requirement on the amount forgiven, which will be considered income.

Can loan finder services do debt consolidation?

Loan finder services differ from debt consolidation services. The loan finder simply looks around the market for the best consolidated loan rates for bad credit. They make their money on the lender, not the borrower side. Once they find offers, they give the borrower several qualified loans to choose from.

Banks, peer-to-peer, and credit union debt consolidation

If you go to a bank to consolidate loans, they will check your credit score. If your score is too low, the bank most likely will turn down your loan application. Another option for debt consolidation with bad credit is peer-to-peer lending. Peer-to-peer and marketplace platforms connect private lenders with borrowers. In many cases, peer-to-peer credit score requirements aren’t as strict. One example is the peer-to-peer lender Prosper.

Another option is a credit union. You have to join these organizations, but they often offer loans to people with less than stellar credit ratings.

Consider credit counseling

If your credit rating is very low, and you’re having difficulty finding a loan, a loan counselor might help. Bad credit often involves a lack of financial skills or knowledge.

Loan counselors can help educate and guide a person out of damaging debt. Unfortunately, there are scam artists who take advantage of these situations. The Federal Trade Commission offers advice about how to choose a counselor and avoid credit scams.

Consider all your options, and make the right move for you

Debt consolidation with bad credit is possible, but it might take a bit of work. In the meantime, if at all possible, make payments on time and in full. Paying on time is the best way to improve your credit score.

Vincent Chough is a writer who earned his medical degree from the University of Pittsburgh School of Medicine and practiced in the U.S. for 10 years.