You could get a credit card consolidation loan for bad credit from Avant, Achieve Personal Loans, LendingPoint or one of the few other lenders that consider applicants with bad credit. But your credit score still needs to be at least 585-600 for you to have a chance to get one of these unsecured personal loans, depending on the lender.
Just because it’s possible to get a credit card consolidation loan with bad credit doesn’t mean you should. Any unsecured personal loans that you can qualify for with bad credit will likely give you an APR at the high end of their range (more than 30%). The lender may also charge an origination fee of 1% - 8% of the loan amount to process the loan. You’re unlikely to qualify for a large loan size, either.
One way to overcome those drawbacks is to consider secured personal loans, which require collateral to open. The lender gets to keep your collateral if you default. The APRs on these loans tend to be lower than those on unsecured personal loans, but you should only pursue this option if you can use collateral that you’re not afraid to lose. Avoid putting up things like your car title, for example.
But loans aren’t the only way to consolidate, let alone lessen your debt load more generally. For example, other methods to consolidate credit card debt with bad credit include borrowing from your home equity and getting money from family or friends.
Alternatives to Credit Card Consolidation Loans for Bad Credit:
- Visit local credit unions. Credit unions aren’t for-profit institutions, and they may be more receptive to loan applicants with bad credit.
- Tap into home equity. If you own a house, you can borrow a portion of its market value minus the amount left to pay on the mortgage through a home equity loan or home equity line of credit. The interest rates should be fairly low, given that the loan is secured by your house. But the danger is that the lender could foreclose if you default. In addition, it’s difficult to qualify for a home equity loan or HELOC with bad credit. According to Experian, you’ll typically need a credit score of 680, though that’s not a hard cutoff.
- Borrow from family/friends. People who know you may be more willing to give you a loan with low interest. Just make sure you sign a written contract and come up with a reasonable plan for repayment, so that your relationship stays healthy.
- Try debt management/settlement. There are a number of different strategies you can take to manage or reduce your credit card debts, such as working out a debt management plan or settling with your issuer. They may be better choices than trying to take out another loan to pay off existing debts.
At the end of the day, it might be possible for you to get a credit card consolidation loan with bad credit, but it shouldn’t be your only option. You should carefully consider all possibilities before proceeding, as the wrong choice could leave you saddled with even higher costs than before.
There isn’t much point in pursuing debt consolidation If you can’t get a lower APR than what your credit card charges. Credit cards for bad credit tend to have APRs from around 20% to 30%.
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