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How to Get a Debt Consolidation Loan With Bad Credit

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Getting a debt consolidation loan for bad credit may require shopping around, but there are options, including loans from credit unions and online lenders. In fact, some lenders cater to borrowers with bad credit (a credit score below 630) and consider factors beyond your score, such as education, income and job history.

Ideally, a debt consolidation loan should have a lower interest rate than the combined rate on your current debts and allow you to pay off your debt more quickly. Use our debt consolidation calculator to determine if a loan makes sense for you.

Ways to get a debt consolidation loan with a low credit score

Check your credit report: Are mistakes on your credit report the reason why your score is bad? Check for errors such as wrong accounts, incorrectly reported missed payments or inaccurate credit limits. You can check your credit report for free once a year at each of the three credit bureaus at AnnualCreditReport.com.

Even a small bump in your score may improve your odds of qualifying, and going from a bad to a fair credit score (a FICO score of 630 to 689) might shave about five percentage points from your interest rate, according to a survey of lenders that partner with NerdWallet.

Add a co-signer: Some lenders allow co-signers, which can help you qualify for a loan and get you a lower rate. Typically, the co-signer’s credit score must meet or exceed the lender’s minimum requirement.

Improve your debt-to-income ratio: If you don’t need to consolidate debts right away, consider ways to increase your income and pay off small debts. This improves your debt-to-income ratio, which lenders use to evaluate your ability to repay a loan.

Shop around: Compare interest rates and terms from multiple lenders to get a loan with repayments that fit your budget. You can pre-qualify with most online lenders and see estimated rates. This typically involves a soft credit check, which doesn’t have an impact on your credit score.

Shop for consumer-friendly features such as direct payment to creditors, which means the lender sends your loan money to your creditors, simplifying the process — and eliminating any temptation to use the cash for something else.

Where to get a debt consolidation loan for bad credit

Credit unions

Credit unions are nonprofit financial organizations that may offer more flexible terms and lower rates than online lenders.

Federal credit unions cap annual percentage rates on personal loans at 18%, which is lower than the upper-limit charged by most online lenders.

Credit unions don’t allow you to pre-qualify for a loan; applying typically requires a hard credit check, which can temporarily hurt your credit score and make it harder to shop around.

You also need to become a member of the credit union to apply for a loan. This typically means living or working nearby and paying a small membership fee.

Online lenders

Online lenders provide fast funding, since you can often complete the entire loan process online and get funded within a few days to a week.

The biggest drawback is rates can be higher than rates at credit unions. The estimated APR range for online loans for bad credit is 16% to 36%, according to a recent NerdWallet survey.

Online lenders may also charge origination fees that cover the costs of processing your loan. The fee is typically deducted from the loan proceeds, so you might have to request a larger loan in order to get the full amount you need.

Here are online lenders that offer debt consolidation loans for bad credit:

Avant requires a minimum credit score of 580 and $20,000 in gross annual income. About half of the company’s borrowers use its loans for debt consolidation.

OneMain has no minimum credit score or income requirements, but its starting APR is higher than other lenders.

Upstart and Upgrade have similar minimum credit score requirements, but offer lower starting APRs than OneMain and Avant.

Summary of consolidation loan options

Managing your debt consolidation loan

Make a budget: Debt repayment is part of a balanced budget that allocates money toward your needs, wants, savings and debt. Building a budget can help you track your repayment progress, cut back spending and gain more control over your finances.

Stop using credit cards: Avoid running up new debt on the credit cards you’ve paid off, but don’t close the credit cards, which will avoid hurting your credit score.

Keep in touch with the lender: If you fall behind on payments, it’s best to contact the lender as soon as possible to see if it will work with you. Some lenders may offer a hardship program or temporary suspension of your payments until you get back on track.

Debt consolidation loan alternatives

If debt consolidation loans don’t work for you, here are some possible alternatives.

Balance transfer credit card

A balance transfer moves high-interest credit card debt onto a new card with a lower rate. Some cards offer a 0% introductory APR for a year or longer.

Balance transfer credit cards require good credit (a FICO score of 690 to 719) to excellent credit (720 to 850) to qualify. Expect to pay an upfront fee of 3% to 5% of the amount you transfer, and weigh the fee with your potential interest savings.

Debt management plan

A debt management plan from a nonprofit credit counseling agency can help reduce your interest rate and pay off debt faster. It’s an option if you have credit card debt and if you can stick to a payment plan for several years while not using the credit cards.

Bankruptcy

Discharging your debts in bankruptcy may be an option if you are overwhelmed by debt and it will take five years or longer to repay it through consolidation. Bankruptcy wipes out most kinds of unsecured debt, including credit cards and medical bills.

While your credit score may initially take a hit, it should begin to recover within months after you file for bankruptcy.

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Miracles in a tough season

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Harry Hines Boulevard in northwest Dallas is a “track,” a place where prostitution is, at least in normal times, visible and available. It’s a wide, treeless expanse of concrete, low-slung buildings, and neon signs. On a Saturday in early August, a nearly full moon glowed in the southeastern sky. A couple of strip clubs had reopened and, judging from the parking lots, were doing good business. Outside of one, a doorman stood wearing a surgical mask. 

The pandemic hurt strip clubs like those on Harry Hines Boulevard, and it also put a crimp on prostitution generally. The Dallas Police Department (DPD) reported that cases of johns “purchasing prostitution” dropped 63 percent during the first half of 2020 compared with the same period in 2019. Human trafficking reports dropped by 39 percent. “COVID has definitely had an impact,” said Maj. John Madison of DPD’s vice unit.

But the pandemic effect has not been all good. Harmony Grillo, founder of Treasures, a California-based ministry to sex trafficking victims, said traffickers are forcing some women to do more porn webcamming “to meet the increased demand that’s created by those in quarantine.” Carol Wiley, director of A Way Out, a similar program in Tennessee, said fewer johns may be renting women face to face, but she fears that “violence toward the women [by traffickers] increases.” 

Some of the heaviest and least-anticipated impacts of the pandemic have fallen on victims of sex trafficking who had already escaped the life. One such victim—call her Ava, because she has legitimate fear of her trafficker tracking her down—was recovering from three years of being sex trafficked when the pandemic hit.

Ava, 24, escaped her trafficker in 2018. She built a relationship with God and overcame deep-rooted social anxieties. But the pandemic shutdown took away much of the community she had built since escaping prostitution. In-person worship services at her church in Fort Worth stopped. Small groups she attended on issues from emotional support to financial coaching could no longer meet.

Ava was living in a house run by Valiant Hearts, a Texas-based group that helps women escape the sex industry. As the pandemic lockdown continued, house parent Tiffany Kiser noticed that Ava had lost the optimism she’d gained since being in the program. She stayed in her room and refused to talk about what was bothering her. 

In normal times, Valiant Hearts provides women with choices, something victims lose when they are trafficked: To appear controlling risks having a victim equate you with her trafficker. But Ava was at a critical point in her healing, one that called for an unorthodox approach. Kiser and Emily Chavez, Valiant Hearts’ program director, demanded that Ava sit down with them. When she did, her hands shook and her face looked as if a year and a half of therapy had completely unwound. Ava said she couldn’t explain how she felt or why. “Just start talking,” Chavez said.

SEX TRAFFICKING IS A LARGE, sophisticated, underground economy, with its own networks, business models, and jargon. Criminals like the one who trafficked Ava are the successful entrepreneurs of the industry. They own multiple homes and drive expensive cars. At any one time, they may control dozens of prostitutes, sometimes trading them with affiliated traffickers in other parts of the country. They diversify across every segment of the market, from prostitution conducted along streets to discreet, “agency-­level” procurement deals for wealthy and prominent johns who shield themselves behind third parties. 

Ava’s trafficker controlled 30 women of different ethnicities, shapes, and hairstyles. He used a combination of charm, coercion, and physical assault to keep them in line. One night after a birthday party for one of the women, police responded to a call about an attempted robbery and shooting. When the police saw so many women and only one man in the house, the officers became suspicious—but could find no grounds to arrest anyone.

The next day, one of the women told Ava she wasn’t feeling well and needed to go to the hospital. Ava loaned her a cell phone so she could call for a ride home. Ava never saw the phone again. At the hospital, the woman told authorities her real problem: She was being trafficked and needed help. The phone became evidence in the case against the trafficker. 

Six months later, police raided the house where Ava lived, arresting her, the other women, and the trafficker. Since she was recovering from invasive cosmetic surgery, police placed her in a segregated cell as a protection against infection. There she remained for six weeks: “It was the first time that my brain had freedom to think the way it wanted to.”

“It was the first time that my brain had freedom to think the way it wanted to.”

In jail, Ava began asking God to show her if He was real. He opened her eyes to see her situation: The trafficker claimed to care about her while beating her and crushing her sense of self-worth. One day as she lay on the skimpy jail mattress, a letter arrived from a friend. It contained a Bible verse, Jeremiah 29:11—“For I know the plans I have for you, says the Lord. Plans to prosper you and to harm you.”

Ava wasn’t sure what to make of it. Were there plans to harm her? She looked the verse up, and realized her friend had miscopied it. The actual verse reads “… not to harm you.” In that moment, she realized if she stayed with her trafficker she might share with her trafficker some of the affluent, glamorous life he portrayed to the world, but there would be harm. 

She decided to take her life away from her trafficker and give it to God.

When she met with her lawyer, she pleaded to find a place where she could learn how “to be human.” That’s how she ended up at Valiant Hearts. Ava was baptized a year ago. Photos from after the service show Ava’s face stuck in a smile that, as she described it, almost covered her eyes.

Ava’s battle was not over. She had to sort through years of emotional damage. For three months after moving into the Valiant Hearts house, she was afraid to leave, only going to church or with others to the grocery store. She also had to unravel a financial and legal mess. Sex traffickers bind and exploit victims by using their identities to open businesses and bank accounts for laundering money. Ava learned about a house in California deeded in her name.

“It’s very strategically planned out,” Chavez said, “so that nothing ties back to [the trafficker]. And when the ladies come out … they have debt, tax evasion, criminal histories, bad credit, and bad relationships with banks.” Ava’s credit score was “about as low as it could get.” Banks turned her down five times for a checking account before she got one through a connection to someone who owned a bank.

WHEN THE PANDEMIC HIT and Ava withdrew, Chavez was worried. She demanded that Ava “just start talking.” 

It started with tears, and what Ava later described as “word vomiting.” She began to see how in the absence of healthy routines and regular worship, she had fallen into old patterns of thought dictated by her trafficker: She’d never amount to anything, never be anything but a prostitute. Ava began to realize the extent to which the pandemic had become a trigger, but one she could counter with skills she had already learned in counseling. 

Since then Ava has made progress. She’s completed the Valiant Hearts program. With her legal troubles mostly behind her, she is moving into her own apartment. She has a job with Savhera, a company that provides employment to victims of sexual exploitation. She is also starting college and has a 10-year plan to get a Ph.D. in clinical psychology, so she can “help more survivors like myself get deeper healing and understanding.”

“This will be the first time I’ve lived on my own literally my entire life. Woo-hooo! The Lord has shown off in this season, really showing miracles. But it’s also been a really tough season.”  

—Paul McDonnold is a graduate of the World Journalism Institute mid-career course



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Warner Robins GA Credit Repair Finance Score Improvement Service Launched

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New credit repair services have been launched by the expert team at Fresh Start Consumer Services. They work with clients in Warner Robins, GA and the surrounding areas.

New credit repair services have been launched by the expert team at Fresh Start Consumer Services. They work with clients in Warner Robins, GA and the surrounding areas.

Fresh Start Consumer Services has launched a new credit repair service for clients looking to improve their financial future. Interested parties can sign up for credit consultations, in-depth credit analysis, credit recommendations and more.

Full details can be found at: https://freshstartconsumerservices.com/index.html

The newly launched services are designed to ensure clients can repair bad financial credit history, track their improvement campaign in measurable ways, and secure a better future for themselves and their family.

Clients can work with Fresh Start Consumer Services to clean up their past. This is achieved by working with the major credit bureaus and creditors to challenge the negative report items that affect the credit score.

Based in Warner Robins, GA, the expert team at Fresh Start Consumer Services is passionate about helping citizens to improve their credit score to give them more buying power. As a result of this, clients are able to secure more options in life.

The team understands that sometimes bad things happen to good people, and their services are designed to ensure that clients can get the most out of life. They also realize that a bad credit score can harm clients’ quality of life – and can be a difficult situation to get out of.

Fresh Start Consumer Services offer courses in credit repair and restoration, budget management, credit education and purchase assistance. Clients get easy access to their account 24/7 for live status updates on improvements, allowing them to fine-tune the management of their credit score.

Service options include personalized dispute options to fit each clients’ exact credit repair needs, an experienced case analyst and case advisor working personally with them throughout the process, custom dispute letters, and more.

For clients, there are a number of reasons to work with a credit repair specialist. Clients are able to secure significant savings on interest rates, attain better terms on loan products, and get access to the best credit card deals. They also gain access to more housing options.

The team states: “Fresh Start Consumer Services offers a unique combination of services that gives our clients the quality of life they deserve. We specialize in helping our clients achieve qualifying credit and the financial health they desire.”

Full details can be found on the URL above.

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Is it Possible to Trade In a Car Early?

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Yes, early trade-ins are possible when you finance a vehicle. In fact, there’s no set time frame on trading in a car. Most dealers won’t take a trade-in that’s too fresh, though, and it’s best to wait until there’s equity in your vehicle before you try to trade it in.

What’s a Trade-In?

When you trade in a car, you’re essentially selling it to a dealership and financing something else from their lot, without the hassle of selling and buying with separate transactions. There are no hard-and-fast rules about how and where you have to trade in your vehicle.

However, it’s beneficial to shop around and see which dealers can give you the best price, but you shouldn’t just head to a car lot and ask what they’re willing to offer you. When the time comes, there are several steps you may want to take to get ready for the trade-in process, especially if you’re looking to trade in early before you’ve had the chance to close the equity gap.

Trading In Early and Equity

Are Early Trade-Ins Possible When You Finance a Car?When you’re trading in a vehicle soon after you’ve financed it, you’re more likely to be in a negative equity position – owing more on your auto loan than the car is worth.

This is especially true if you financed a new vehicle, or a certified pre-owned car. Newer vehicles depreciate faster than used ones, which have typically already seen their biggest drop in value.

Depreciation is the loss of value over time and it can’t be stopped. It can be slowed, though. The best way to do this is by using a large down payment when you finance. This reduces the amount you have to borrow, and leaves you owing a price closer to what the car might cost after you drive it off the lot. New vehicles typically lose around 10% of their value as soon as they touch the road.

If you don’t have the equity to recoup your investment in a car, you have to make up that difference out of your own pocket. It’s much easier to trade in a vehicle that can pay for itself, but this isn’t always possible when you’re trying to do so early.

Preparing Your Early Trade-In

When you know that you’re starting with a deficit on your trade-in, it’s a good idea to be prepared to get the most you can. Clean the car thoroughly, both inside and out, and make sure to fix any minor damage that may have occurred in the short time since you took out your loan.

Getting the vehicle detailed and fixing major mechanical issues isn’t likely to result in a worthwhile increase to the cash in your pocket, so don’t go overboard. Remember, you want to make as much money on this trade as you can, and it’s probably cheaper for the dealership to fix any large issues.

Before you set foot in a dealer to get your trade-in appraised, it’s a good idea to know approximately how much your car is worth. You can find this out by going to online valuation sites such as Kelley Blue Book or NADAguides. Be sure to be honest when you’re inputting information, since it’s the only way to get an accurate estimate of possible value.

Shopping for Trade-In Values

Once you have the estimates (which you should print or save to your phone), it’s time to take your trade-in to get looked at. Taking it to a few different dealerships is a good way to find the best deal you can.

We recommend taking your early trade-in to at least three different dealers, making sure at least one of them is a franchised dealership that sells your vehicle’s brand. A franchised dealer that sells your car’s brand may be more likely to offer a higher price.

Depending on your credit situation, it’s likely a good idea to ensure you’re trying to trade in your vehicle to a dealership that can work with your situation, especially if you have poor credit. And that’s where Auto Credit Express can come in handy.

We have a nationwide network of special finance dealers that are signed up with subprime lenders who can help people in many different types of credit situations, including bad credit, no credit, and even bankruptcy.

The process is easy to get started – just fill out our free auto loan request form. We’ll match you to a local dealership that can get you started on the financing you need after your early trade-in.

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