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How to Apply for a Debt Consolidation Loan in 2022

January 3, 2022

Getting a debt consolidation loan might be easier than you think. Even if you have bad credit (i.e., a credit score under 600), it’s possible to get the debt consolidation loan that you need. I’ve gone through the process of applying for a debt consolidation loan myself, so I know the nuances well!

Here are the main steps of applying for a debt consolidation loan.

5 Steps to Apply For a Debt Consolidation Loan

1. Figure Out Your Credit Score (And Raise It If Possible!)

The first thing you need to do before looking into debt consolidation is to get an idea of what your credit score is. Many banks and most major credit card companies offer free credit score monitoring and can tell you your FICO Score in minutes – which typically is the score that lenders will look at when they’re reviewing your loan application.

Ideally, you want your credit score to be above the 600-650 range or you might get turned down for the loan. If your credit score is lower than that, try to wait a few months before applying for the loan and work on getting your score up. You’ll find some tips on how you can quickly improve your credit score below.

2. Determine How Much Debt You’re Looking To Consolidate

This next step is pretty simple, but it’s vital to make sure your consolidation loan is able to cover the outstanding debt that you’re hoping it will. Take some time and line up all the debt that you’re looking to consolidate with this loan. (Student loan debt consolidation is also a thing, but that would typically be a separate process depending on how much debt you have.)

Your debt can include credit cards, payday loans, cash advances, personal loans, and more. Also note the interest rates and your minimum monthly payments so that you can make sure the loan you’re getting has better terms.

3. Choose a Lender

Once you know how much debt you are hoping to consolidate, it’s time to start shopping around so that you can find the best terms possible. In most cases, you shouldn’t just take the first deal that you can find. If you compare different lenders, one of them might be able to offer better terms to entice you to make a deal with them over another company.

There are three main components to keep in mind when searching for the best loan terms:

  • The length of the loan
  • The minimum monthly payment
  • The interest rate

You want to make sure that you can afford the monthly payment so you don’t struggle to pay it back. Most importantly, the interest rate will be the biggest factor in how much you have to pay back in total – so the lower, the better.

Be sure to consider the four lenders that I go over in the next section, as they’re some of the best options that you’ll find.

4. Apply for a Loan and Close the Deal

After you’ve checked out what a few different lenders have to offer, it’s time to apply for a loan and see if you qualify. An online application only takes minutes. Just be sure to have scanned versions of the required documents ready to go:

  • Proof of identification (driver’s license, other government-issued ID)
  • Income verification (last couple of pay stubs or a bank statement)
  • Debts you want consolidated (most recent statements)
  • Proof of address (utility bill, credit card statement, lease agreement, etc.)

The application process itself is pretty straightforward – all you’ll have to do is fill out some forms. Make sure you pay attention to the terms and the fine print which outlines how much you have to pay, the interest rate, any fees, and anything else pertinent to the loan.

Once you submit your application, you can expect to hear back about your approval within 2 to 3 business days. Following approval of the loan, lenders will usually get the funds transferred to your bank account within 7 business days.

5. What to Do If Bad Credit Is Preventing You From Finding a Loan

If you’ve checked various lenders but you still can’t get a debt consolidation loan because of your credit score, you aren’t out of luck just yet. At this point, there are basically three options – look for a secured loan, have a cosigner, or work on raising your credit score.

  • Secured Loan – Most loans that you can get are unsecured, meaning you don’t have to put up any collateral to get the funds. If your credit score is preventing you from signing a deal, however, you might want to consider putting up some sort of collateral (such as your home or car) and taking out a secured loan.
  • Get Someone to Cosign – If you know someone with good credit who’s willing to cosign on your loan, their credit score might help you seal the deal. In this case, they’ll typically become liable for the loan if you default. So it will likely need to be someone that trusts you completely.
  • Raise Your Credit Score – If your credit score is too low to get a loan, the best thing you can do is focus on improving it. Continue paying down your debt aggressively and make sure not to miss any payments. Your score will go up quicker than you might think!

How to Raise Your Credit Score

These are some of the best ways to quickly improve your credit score:

  • Catch up on any late payment.
  • Pay down your utilization rate.
  • Prevent any hard inquiries into your credit score.
  • Stay current on all outstanding debt payments.

The Best Lenders for Debt Consolidation Loans

Now that you know what’s actually involved in the loan application process, it’s time to take a look at some of the best lenders out there.

1. LendingTree

With LendingTree, the application process is as easy as it gets. All you need to do is fill out a form online and in just a few minutes, you’ll see a list of available loans from different lenders. If you qualify for a loan, LendingTree will actually match you with up to 5 lenders right away, so you can quickly and easily compare offers side by side.

With the offer details right there in an easy-to-read format, you get to decide which lender is best for you. Maybe you want the lender with the lowest interest rate; or maybe you want to keep your monthly payment down. It’s up to you to choose.

And with debt consolidation loans up to $50,000, you should have no trouble consolidating all (or at least most) of your debt with LendingTree.

To find out more, read our expert LendingTree review.

Compare Loans on LendingTree

2. Credible

Credible is all about streamlining the loan application process and finding you a lender as fast as possible. After quickly comparing available rates side-by-side and picking a lender, all you have to do is complete the application process online and you’ll be all set.

The lenders on Credible’s site show interest rates and how much they’re willing to lend, with offers being anywhere from $600 to $100,000 for consolidation loans. Since it’s all online, it’s quick and easy. Plus, Credible is known for guaranteeing the best rate available so you really have nothing to lose.

Read about this lender’s pros and cons in our full Credible review.

Compare Loans on Credible

3. National Debt Relief

When you visit National Debt Relief’s website, it may not look quite as polished as some of the other options, but it gets the job done. To start, you just need to enter the amount you’re trying to get a loan for and then fill out basic information. From there, the company will get in touch with you via email or phone and walk you through the rest of the process.

National Debt Relief offers debt consolidation loans for any amount up to $100,000 or even more, so you should be able to find what you’re looking for. It boasts loan terms of 24-60 months, suggesting that you will be debt-free in 2-5 years.

For more information, check out our in-depth National Debt Relief review.

Get Started on National Debt Relief

4. Freedom Debt Relief

Similar to the lender above, Freedom Debt Relief’s site is not as user-friendly as some of the other lenders you’ll find online, but it’s simple enough to navigate. To see if you qualify for a debt consolidation loan, you just need to click on how much debt you have (from $1,000 up to $100,000+), select the state you live in, and provide some basic contact info.

After that, a representative will reach out to you to go over your options and help you find a lender that will work for your situation. Without providing the site with contact info, you can’t see your lender options or the loan terms that you’re looking at, so it’ll take a bit more work to get to the end of the process.

Read our full Freedom Debt Relief review to learn more.

Get Started on Freedom Debt Relief

The Bottom Line

Debt consolidation loans can help lower your monthly payments and make your life much simpler by having just one bill at the end of the month to cover everything. The application process for the loan is quick and easy, but much of it hinges on your credit score.

With good credit, qualifying for a debt consolidation loan is easy and won’t take you long at all. If you use one of the four lenders above, you should get some of the best terms you’ll find anywhere and be on your way to being debt-free in no time!