15 best debt consolidation loans for fair credit

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Our goal here at Credible Operations, Inc., NMLS Number 1681276, referred to as “Credible” below, is to give you the tools and confidence you need to improve your finances. Although we do promote products from our partner lenders who compensate us for our services, all opinions are our own.

The best debt consolidation loans for fair credit have low interest rates and no fees. (iStock)

If you’re digging out from under a stack of credit card bills, you might consider a debt consolidation loan. With these loans, you can take out one new loan to pay off all your other personal debt — potentially at a lower interest rate.

With fair credit, you’ll likely have multiple options when it comes to shopping for a debt consolidation loan. But depending on your specific credit score, the interest rate and loan terms you’re offered can vary. The better your score, the better deal you’re likely to get. 

Each lender has different guidelines for its debt consolidation loans, so be sure to shop around and compare several options before settling on the best loan for your financial situation. 

What’s a debt consolidation loan and how does it work?

A debt consolidation loan is a type of personal loan that you can use to pay off your current debts and replace them with a new, single payment. 

Personal loans have the advantage of fixed rates, meaning your monthly payment won’t change for the life of the loan. They’re also generally unsecured, so you don’t have to use your house or car as collateral for the loan. You won’t risk either if you fail to make your payments, unlike with a mortgage or auto loan.

You can use a debt consolidation loan to pay off many different kinds of debt, from medical bills to other personal loans. But they’re especially useful for consolidating credit card debt because they typically have lower interest rates than most credit cards. Using a debt consolidation loan to pay off your high-interest credit card balances can leave you with a lower monthly payment. 

A debt consolidation loan for people with fair credit can come with fees and other costs that you won’t face if you have good credit. But you’ll have more (and better) options than people with bad credit.

What’s a fair credit score?

A credit score is a gauge of how likely you are to pay back your loan, expressed as a number calculated by one of the three main U.S. credit bureaus. FICO scores can range from 300 to 850, and the higher your score, the better.

A number of factors determine your score. The most important is your payment history on accounts you’ve opened, especially how often you make your payments on time. Other factors include:

  • Your current amount of debt
  • How many loans you have
  • How long you’ve had your accounts
  • How much of your credit you’re using
  • When you’ve applied for new credit
  • Any recent bankruptcies, foreclosures or debt collection actions

A fair credit score typically falls between 650 and 699. Below this range is bad credit, which can make it harder to qualify for a loan. Once you reach a score of 700, you’re considered to have good credit, and a score of 750 or higher is considered excellent.

Credible lets you compare personal loans to see what rates you may qualify for.

Best debt consolidation loans for fair credit: 15 lenders to consider

While qualification requirements can vary based on your credit score, here are 15 lenders you might consider for a debt consolidation loan with fair credit. The following 13 lenders are Credible partners.

Avant

Avant has a relatively low minimum credit score requirement, so you may still qualify with a score on the lower end of the “fair” range.

Minimum credit score: 550

Loan terms: Two to five years

Loan amounts: $2,000 to $35,000

Fees: Administration fee of up to 4.75%

Good for: People with lower credit scores

Best Egg

Best Egg says that roughly half of its borrowers receive their loan funds by the next business day.

Minimum credit score: 600

Loan terms: Two to five years

Loan amounts: $5,000 to $50,000

Fees: Origination fee of 0.99% to 5.99%; $15 late payment fee

Good for: People who want to get their money quickly

Discover

Discover offers you the chance to return the money you borrow within 30 days with no interest charged, so if you change your mind, you’re in luck.

Minimum credit score: 660

Loan terms: Three to seven years

Loan amounts: $2,500 to $35,000

Fees: None, though a late payment fee of $39 may apply

Good for: People who aren’t sure if they’ll need a loan

LendingClub

Even with fair credit, you might still get multiple offers from LendingClub investors who want to fund your loan.

Minimum credit score: 600

Loan terms: Three or five years

Loan amounts: $1,000 to $40,000

Fees: Origination fee of 3% to 6%; late payment fee of $15 or 5% of the overdue monthly payment

Good for: People who want to evaluate multiple lenders in one place

Compare personal loan rates from these and other lenders using Credible.

LendingPoint

LendingPoint says it can decide whether to approve you for a loan within just a few seconds.

Minimum credit score: 580

Loan terms: Two to five years

Loan amounts: $2,000 to $25,000

Fees: Origination fees from 3% to 6%

Good for: People who want to know quickly if they qualify

LightStream

LightStream could be a good option if you need a large loan and a long time to repay it.

Minimum credit score: 660

Loan terms: Two to 12 years for home improvement loans; two to seven years for all other loans

Loan amounts: $5,000 to $100,000

Fees: None

Good for: People who need to borrow a large amount of money

Marcus by Goldman Sachs

Marcus allows you to defer a monthly payment after a year’s worth of on-time payments. While you’ll still pay interest during this month, this feature can give you some breathing room when you need it.

Minimum credit score: 660

Loan terms: Three to six years

Loan amounts: $3,500 to $40,000

Fees: None

Good for: People who want to defer a payment 

Payoff

Payoff specializes in debt consolidation, and even offers in-house experts to talk you through paying off your debt.

Minimum credit score: 640

Loan terms: Two to five years

Loan amounts: $5,000 to $40,000

Fees: Origination fee of 0% to 5%

Good for: People who want help paying off their debt

OneMain Financial

If you’re just starting out and don’t have a long credit history, OneMain’s offer to lend to people without a minimum credit score can help you qualify.

Minimum credit score: None

Loan terms: Two to five years

Loan amounts: $1,500 to $20,000

Fees: Origination fees apply. These can be flat fees between $25 and $500 or a fee of 1% to 10% of the loan amount.

Good for: People with a limited credit history

PenFed Credit Union

PenFed’s minimum loan amount of $600 might be the smallest you’ll find.

Minimum credit score: 670

Loan terms: One to five years

Loan amounts: $600 to $35,000

Fees: None

Good for: People who need a small loan

Prosper

Prosper matches you with investors who are interested in funding your loan. If you have a special circumstance, you might have a better chance of qualifying.

Minimum credit score: 640

Loan terms: Three or five years

Loan amounts: $2,000 to $40,000

Fees: Origination fee of 2.4% to 5%; late payment fee of $15 or 5% of the unpaid monthly payment

Good for: People who have a unique financial situation 

Upgrade

Upgrade considers people with lower credit scores, and loan funds may be available in as little as one business day.

Minimum credit score: 580

Loan terms: Three or five years

Loan amounts: $1,000 to $50,000

Fees: Origination fee of 2.9% to 8%

Good for: People who are building credit 

Upstart

Upstart doesn’t just look at your credit score — the lender also takes your education and job history into account. With a fair score and a solid history at work and school, you might get a better deal.

Minimum credit score: 580

Loan terms: Three to five years

Loan amounts: $1,000 to $50,000

Fees: Origination fee of 0% to 8%; late fee of $15 or 5% of the past due balance (whichever is greater); ACH return or check refund fee of $15

Good for: People who have a stellar job or education history

Other lenders to consider

The following lenders are not Credible partners, so you won’t be able to easily compare your rates with them on the Credible platform. But they may also be worth considering if you’re looking for a debt consolidation loan with fair credit. 

Earnest

Earnest is an online platform that matches you with different lenders. But take note that its loans aren’t available in AL, DE, KY, NV or RI. 

Minimum credit score: 680

Loan terms: Three to five years

Loan amounts: $5,000 to $75,000

Fees: Does not disclose

Good for: People who want to comparison shop before applying for a loan

Laurel Road

Laurel Road doesn’t charge any fees on its personal loans and offers an autopay discount. 

Minimum credit score: 660

Loan terms: Three to five years

Loan amounts: $5,000 to $45,000 (depending on loan type)

Fees: None

Good for: People who want to borrow money without paying fees

Methodology: How Credible evaluated lenders

Credible evaluated debt consolidation lenders based on a variety of categories, including the minimum fixed rate, customer experience, time to fund, maximum loan amount, term length and fees. Credible’s team of experts gathered information from each lender’s website, customer service department and via email support. Each data point was verified to make sure it was up to date.

How to get a debt consolidation loan for fair credit

If you’re interested in getting a debt consolidation loan for fair credit, here are the steps you should take.

  • Check your credit score. Your score dictates what loans you qualify for, and what interest rates and loan terms you’re offered. You should know your score going into the process. Checking your credit report also gives you the chance to correct any errors on your report that might be holding your score down. Each credit bureau is required by law to give you a free copy of your report once per year. Use a site like AnnualCreditReport.com to get your copies, and scour them for mistaken account balances or any other errors.
  • Shop around. Lenders often post information on their websites about the interest rates and loan terms they offer. You can look at the interest rate ranges and terms and see if the lender might be a good fit.
  • Prequalify. When you’ve found a few lenders that might fit the bill, you can use each company’s online form to request a rate quote or prequalify for a loan. Most of the time, this will only use a “soft credit inquiry” on your credit, so your score won’t be affected. To get a rate quote, you’ll typically need to give the lender your Social Security number and a little information about your finances and the type of loan you’re looking for. These rate quotes will give you a good indication of what rates and terms you’d be able to receive, so you can use this information to compare loans and find the best one for you.
  • Apply. Once you’ve found the quote that works best for you, it’s time to formally apply for the loan. You’ll need to submit more information to the lender, which they’ll use to make a final decision on your loan. The lender may also run a hard credit check, which can temporarily lower your score by a few points.
  • Accept your loan. If you’re approved for the loan, your lender will tell you what you need to do to receive your loan funds. This could take a day or two, and the money can usually be deposited directly into your bank account.

Comparing fair credit debt consolidation loans and lenders

Every personal loan you evaluate will look a little different, but there are a few variables it always pays to look at. Here are the most important elements to compare when shopping for a debt consolidation loan for fair credit.

  • APR: This is the annual percentage rate, or the total cost of the loan each year as a percentage of the loan amount. The APR on a loan includes the interest rate and all fees charged. Using the APR to compare loans instead of just the interest rate gives you a better apples-to-apples comparison, as it includes all the costs of borrowing money.
  • Fees: Fees can vary widely from lender to lender. Some debt consolidation lenders don’t charge any, while others may charge application fees, origination fees or late fees. Few lenders charge an application fee, and you’re bound to find one that doesn’t. But be sure to check the origination fee, if one applies. Some lenders don’t charge them, while others charge a percentage of the loan that’s typically deducted from the amount you receive.
  • Repayment terms: This generally refers to the length of time you have to pay back the loan. The longer the term, the lower your monthly payment — but the more you’ll pay in interest. Lenders typically offer terms that can be as short as one year or as long as 12.

If you’re ready to start comparing personal loan rates, Credible makes the process easy.

Pros and cons of debt consolidation loans for fair credit

All financial products have advantages and disadvantages. It’s important to weigh the benefits against the costs when deciding if a debt consolidation loan is right for your situation.

Pros of debt consolidation loans for fair credit

  • Single, fixed monthly payment — When you take out a debt consolidation loan, you pay off all of your credit card and other personal debt and replace it with a single new loan. Some lenders will even pay creditors directly with a debt consolidation loan. Debt consolidation loans typically have fixed interest rates, so the amount you pay each month won’t change for the life of your loan.
  • Lower interest rates — A personal loan used for debt consolidation generally has a lower interest rate than credit cards, so you may save money by consolidating your debt.
  • Lower risk — Debt consolidation loans are typically unsecured, meaning you don’t have to stake your home or other property as collateral for the loan. Other options, like home equity loans, do require collateral, meaning you may risk foreclosure if you’re not able to keep up with your payments.

Cons of debt consolidation loans for fair credit

  • Harder to qualify for good terms — With fair credit, you may have fewer choices for a debt consolidation loan, depending on your specific credit score. You may not be offered the interest rate and loan terms you’re hoping for.
  • Higher interest costs — Debt consolidation loans are cheaper than credit cards, but they do often have higher rates than secured loans, like a home equity loan or HELOC. You may have debts at lower interest rates that wouldn’t make sense to consolidate.
  • High fees — Debt consolidation loans for fair credit may come with fees that reduce the amount of money you receive after taking out the loan. You might be able to avoid these fees if you can improve your credit.

Alternatives to debt consolidation loans with fair credit

If you want to consolidate debt, a debt consolidation loan isn’t your only option. Here are a few others to consider.

  • Balance transfer credit card: With a balance transfer credit card, you can transfer the amounts you owe on several different cards, leaving you with a single payment. Many of these cards have a low introductory interest rate — sometimes even 0% — for a short period of time. But watch out for fees — balance transfer cards typically come with a fee of 3% to 5% of the amount you transfer. And if you aren’t able to pay off your full balance by the time the introductory period expires, you’ll start accruing interest at the card’s regular rate.
  • Home equity loan or home equity line of credit (HELOC): If you own a home, you might be able to borrow against the equity in your property in order to pay off debt. Your equity is the difference between what you owe on your mortgage and what your home is worth. Interest rates on these loans tend to be lower, but they’re secured loans — and your home is the collateral. So if you fall behind on your payments, you could risk losing your home.
  • 401(k) loan: Your employer-sponsored retirement plan may allow you to borrow from the amount you’ve socked away. These loans tend to have low interest rates, and you won’t need a certain credit score to qualify. But you lose out on investment gains, and you might have to pay all the money back quickly if you lose your job.

Ways to boost your credit

You can likely save a lot of money in interest if you’re able to boost your credit from the “fair” range up to “good” — or even “excellent.” Start by requesting your credit report. Make sure there are no errors on it and identify any areas you see that can be improved.

Commit to paying all of your bills on time, every time. Your payment history is the No. 1 factor in determining your credit score, and if you’ve missed payments in the past, it’ll take time to rebuild that history. 

You can also boost your credit score by paying down credit card balances and avoiding applying for new credit.


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