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Best Debt Consolidation Loans and Debt Settlement Services in December 2022

December 1, 2022

With debt consolidation, you take out a new, larger loan to pay off several smaller debts. This strategy can streamline your bills and may reduce your monthly payments and your interest rate. Debt consolidation might be right for you if you have a lot of unsecured debt, such as student loans, credit card bills, personal loans, and medical debt.

Choosing the best debt consolidation loan improves your chances of success with this technique. In this guide, I’ll review the best lenders for debt consolidation and discuss the advantages as well as possible red flags with this type of loan.

The Top Lenders for Debt Consolidation and Settlement in December 2022

Comparing rates from a few different lenders can help you find a debt solution that fits your needs whether you’re seeking consolidation or settlement. These top lender picks balance affordable rates, easy-to-use online platforms, convenient service, and quality customer care.

1. LendingTree

Available Debt Consolidation Services
  • Personal debt consolidation loans
  • Balance transfer credit cards
  • Home equity loans
401(k) loans
Debt management plans
Swipe for more

On LendingTree, you can compare rates from many debt consolidation lenders by submitting a single application. Upon approval, the platform allows you to view your offers side-by-side so you can decide whether to move forward with debt consolidation and select a lender.

With access to a wide range of online and traditional banks, LendingTree might have a loan that fits your needs even if you have imperfect credit. Some lenders accept credit scores as low as 580. You may also be able to access lower rates here than from direct lenders, since the platform allows banks to compete against one another for your business.

If you’re not ready to enter your personal information, you can browse the daily rates for debt consolidation loans from a range of lenders. LendingTree groups these lenders by minimum credit score for approval in a user-friendly table that includes columns for origination fees and available APR ranges, loan term lengths, and amounts.

I also appreciate the extensive financial tools and resources LendingTree offers. These include calculators, guides, and in-depth tutorials.

To find out more about LendingTree, read our expert review.

Compare Debt Consolidation Loans on LendingTree

2. Credible

Available Debt Consolidation Services
  • Debt consolidation loans
  • Credit card consolidation loans
Swipe for more

Like LendingTree, Credible allows you to enter your information to receive quotes from multiple lenders based on your specific financial situation. This company advertises debt consolidation loans starting at an APR of 5.99%, much lower than the average APR for most credit cards. You can apply for funding of less than $1,000 or consolidate larger debts with available loans of up to $100,000.

Credible has a unique best rate guarantee that helps you find a competitive APR. If you can get a better interest rate elsewhere, the company promises to pay you $200.

Credible promises that it won’t sell customer information or impact your credit score, which provides peace of mind if you have data privacy concerns. Other benefits of this lending platform include fast preapproval within just two minutes and an intuitive dashboard that allows you to complete the entire application and funding process without leaving the site.

As a Credible applicant or borrower, you can between chat or phone support during designated Pacific Time business hours (this might give you pause if you live on the East Coast or elsewhere).

Read our in-depth Credible review to learn more.

Compare Debt Consolidation Loans on Credible

3. National Debt Relief

I always check reviews from other customers and industry associations before I sign up with a new financial service, so I was happy to see a 4.5-star overall Google rating and an A+ Better Business Bureau rating for National Debt Relief. This company offers debt settlement services, which means they help you negotiate with creditors to lower your rates or even accept less than the full amount for your debts.

If you’re interested in learning more about the debt settlement process, you can visit the site to fill out a form with your contact information. National Debt Relief will use this information to contact you for a free consultation about your options, which gives the online process a personal touch. Customers can access debt settlement for unsecured debts, but this program does not provide relief for legal debts, taxes, utility bills, federal student loans, auto loans, or mortgages.

National Debt Relief supports customers with online tools and resources that facilitate effective debt payoff and eventual financial freedom. I was impressed by the interactive online dashboard, which offers charts and graphs that make it easy to see your debt shrink.

The company has a minimum settlement amount of $7,500 and charges a fee ranging from 10 to 25 percent of your total debt. Most customers complete their debt relief programs in two to four years.

Debt settlement services like those offered by National Debt Relief aren’t available in every state. You cannot qualify for this program if you live in West Virginia, Connecticut, Maine, New Hampshire, South Carolina, Vermont, Kansas, or Oregon. In addition, while debt settlement can help you get out of debt, it will also have a negative impact on your credit score.

Discover all the pros and cons in our full National Debt Relief review.

Get Started with National Debt Relief

4. Freedom Debt Relief

This company claims to reduce the stress of debt with affordable services that potentially lower your rates and help you pay off debt sooner. Freedom Debt Relief works with customers at all credit levels to create a debt repayment plan that fits your budget with no upfront fees. Its services are accredited by the International Association of Professional Debt Arbitrators (IAPDA) and the American Fair Credit Council (AFCC).

When you sign up with Freedom Debt Relief, the assigned counselor will help you create a budget that works with your income and expenses. With this plan, you make one monthly payment toward your debt. After completing the full payment plan, you will be free of debt, although the program does not prevent you from taking on additional debt.

Depending on the state where you live and the applicable laws, you could save as much as 50 percent on the balance of your debt. However, any debt settlement program will have a negative impact on your credit score. For this reason, Freedom Debt Relief may not be the best fit if you are current on your payments and can qualify for a debt consolidation loan.

Services from Freedom Debt Relief are not available everywhere. The company provides debt settlement relief to customers in 22 states.

See our in-depth Freedom Debt Relief review for more details.

Get Started with Freedom Debt Relief

What Is Debt Consolidation?

Debt consolidation means transferring several loans and/or credit cards to a single lender. Instead of making multiple monthly payments, you make just one monthly payment for the new loan. Debt consolidation can help you track your debt so you can make an effective repayment plan and meet your other financial goals.

How Do Debt Consolidation Loans Work?

When applying for a debt consolidation loan, the requested amount should cover the total of your existing debt. If you receive approval from the lender, you use the funds to pay off your current debt. Some lenders take care of this process for you while others send a check or electronic funds transfer. Then, you make a single fixed monthly payment toward the new loan each month.

Looking at an example can help illustrate the concept of debt consolidation. Let’s say your monthly unsecured debt payments include:

  • A student loan at 12 percent
  • Three credit cards ranging from 20.99 to 28.99 percent
  • A personal loan at 15 percent

In this case, debt consolidation can significantly lower your monthly bills if you can obtain a loan with a fixed interest rate of less than 12 percent. It also helps you repay debt faster than you could if you made only the minimum payments on your credit cards.

Compare Debt Consolidation Loans on Credible

When Should You Take Out a Debt Consolidation Loan?

Debt consolidation loans make sense if you have several high-interest credit cards or loans and want to simplify your monthly payments while saving money. These loans are designed for unsecured debts, which do not have assets the bank can seize as collateral for failure to repay. Secured debts, such as auto loans and mortgages, must be refinanced if you want to change your payment terms.

A debt consolidation loan may be a smart choice for your finances if you can get a favorable interest rate. You should look for a lender offering a lower rate than the interest rate on your existing debt. A loan marketed for debt consolidation by the lender may not necessarily have a low APR, so be sure to read the fine print. It’s easy to compare multiple loans side by side on sites like Credible and LendingTree.

Your debt consolidation loan should also have a shorter payment term than the loans and credit cards you plan to consolidate. Otherwise, you simply lower your payments by extending the life of the loan, which will dramatically increase the overall amount you pay toward interest. Ideally, you should have a plan to repay your debt consolidation loan within five years.

If you cannot qualify for a good interest rate on a debt consolidation loan, focus on making on-time payments for your existing credit cards and loans. Building a solid payment history will help increase your FICO credit score. Check back after several months to see if your score has improved enough to be approved for low-rate debt consolidation.

Debt consolidation does not offer a solution for debt you cannot afford to repay. You may be in this situation if your monthly debt payments equal more than half of your monthly income when you include rent or mortgage. Avoid taking out a debt consolidation loan if you are not sure whether you can afford the monthly payments.

When you choose debt consolidation, create a realistic monthly budget that accounts for the new payment as well as your income and expenses. This step can help you pay down the new loan without accumulating more debt. If your expenses come close to or exceed your income, see where you can make changes to avoid using high-interest credit cards and loans in the future.

Compare Debt Consolidation Loans on LendingTree

Who Can Apply for a Debt Consolidation Loan?

Understanding the factors that influence approval can help you decide whether the time is right to consolidate your debt.

Credit Score

As with other types of loans, your FICO credit score plays a big part in lender approval for a debt consolidation loan. This three-digit number, which ranges from 300 to 850, accounts for factors such as your payment history, how much debt you have, and the length of your credit history.

Most debt consolidation lenders require a score of 680 or higher for the best rates. Most lenders have a minimum credit score requirement in the mid-600s. If you have a lower credit score, you may be able to qualify for a loan with a relatively high interest rate.

Debt-to-Income Ratio

Lenders also consider your debt-to-income ratio, or DTI. You can find this number by dividing your total monthly debt payments (including mortgage or rent) by your gross monthly income. For example, if you have $500 in credit card bills and a monthly mortgage payment of $1,000, divide $1,500 by your monthly income of $4,000 to reach a DTI of 37.5 percent.

Every lender has its own DTI requirements, but you generally need less than 50 percent to qualify for a debt consolidation loan. In comparison, mortgage companies typically require DTI below 43 percent for approval.

Other Factors

If you cannot qualify for a debt consolidation loan because of your credit score or DTI, you may qualify with a cosigner. This person, often a family member, signs the loan with you and agrees to make payments in the event of default.

Lenders may also consider your education level, your history of steady employment, your history as a renter or homeowner, and whether you own assets such as investment accounts or real estate.

Compare Debt Consolidation Loans on Credible

How to Choose the Best Debt Consolidation Loan for Your Needs

Keep these important factors in mind when comparing debt consolidation lenders:

  • The annual percentage rate of the loan, or APR. This number includes all interest and fees for the loan, so it provides the best picture of the actual cost to you. You can access a lower APR if you have good credit and a favorable DTI.
  • Fees associated with the loan. For example, some lenders charge an origination fee of up to 10 percent of the total amount. Often, the lender adds these fees to the balance of your loan, which increases the monthly payment.
  • Special features offered by the lender. Examples include programs that pause payments if you lose your job or become disabled, direct payment of your existing debts to streamline the consolidation process, and free credit score monitoring.

Some lenders specialize only in debt consolidation while others offer mortgages, student loans, business loans, and other financial products.

Compare Debt Consolidation Loans on LendingTree

Why Should You Consider an Online Lender?

While you can still get a loan the old-fashioned way by visiting a local bank branch, more traditional and modern lenders are now offering completely online loan application and funding processes. Some of the benefits of choosing an online lender for your debt consolidation loan include:

  • Convenience, including the ability to complete all your paperwork from the comfort of your home or office in just a few minutes, on your own schedule
  • Data security, as both online and traditional lenders must comply with the same federal laws that protect customer information
  • Instant access to resources that can help you improve your financial situation, such as loan calculators that help you estimate your monthly payments
  • Robust customer support, including 24/7 access to chat and phone service from many online lenders
  • Speed, with funds available to qualified borrowers within 24 hours from some lenders
  • Transparency through platforms such as Credible and LendingTree so you can compare rates and fees across lenders without the legwork of phone calls and appointments

Despite these advantages, online lenders aren’t the right fit for everyone. Some borrowers may get the best rates from their local bank or credit union, especially long-time customers of those institutions. You might also prefer a debt consolidation loan you can manage in person rather than through an online account.

Compare Debt Consolidation Loans on Credible

How Do You Apply for a Debt Consolidation Loan?

Online lenders make it easy to apply for debt consolidation. You usually need only your Social Security number, address, monthly income and expense information, and other personal details. If you decide to move forward with debt consolidation, the lender you choose might require additional documentation.

You may also want to check your credit score before applying for this type of loan. You may find errors that will affect your ability to qualify for a loan. If you have a FICO score of 620 or below, consider taking steps to improve your credit such as paying down credit cards and disputing incorrect information before applying for debt consolidation.

How Much Does a Debt Consolidation Loan Cost?

Compare the costs of different debt consolidation loan offers by requesting prequalification. With prequalification, the lender will provide an estimate of the available APR, loan amount, and monthly payment based on your credit score, income, and other financial details. Make sure the prequalification process uses a “soft” rather than “hard” pull of your credit to avoid an unwanted score decrease.

Debt Consolidation Loan Alternatives

Repaying debt requires an approach targeted to your financial situation. You may also want to consider these alternatives to debt consolidation.

Debt Settlement

Companies that specialize in debt settlement, including National Debt Relief and Freedom Debt Relief, attempt to negotiate lower interest rates, longer payment terms, and lower balances with your creditors.

Usually, you make an affordable monthly payment based on your income and expenses directly to the settlement company. It holds these payments in a designated account during the negotiation process. If a creditor agrees to lower your debt, the debt settlement company will use the funds to pay as agreed.

Although debt settlement can successfully lower your monthly payments and overall debt, it will also lower your credit score. This occurs because creditors will not agree to debt settlement unless you have a significant past-due balance. The account will appear as “settled for less than owed” on your credit report, which also has a detrimental effect.

Carefully review fees when working with a debt settlement company. The cost of this service ranges from about 10 to 25 percent of the total debt balance.

Get Started with National Debt Relief

Balance Transfer Credit Card

With this approach, which some lenders call credit card refinancing, you transfer the balances of your existing credit cards to a new card with a lower interest rate. In fact, many balance transfer credit cards offer an introductory period with 0 percent APR, often for the first 12 months. The card must have a high enough credit limit to cover the debt you plan to consolidate.

Most balance transfer credit cards require a credit score of at least 690, so this option may be out of reach if you have an imperfect credit history. You should also carefully weigh the balance transfer fee and other costs before signing up for this type of credit card. The balance transfer fee alone can total up to 5 percent of the consolidated debt.

Using a balance transfer credit card to consolidate your debt can backfire if you do not repay the loan during the 0 percent interest rate period. After this introductory term, the APR will increase and may exceed the interest rate of your original credit cards.

Personal Loan

“Personal loan” is an umbrella term that covers most types of unsecured loans, including debt consolidation loans. You can use a personal loan for any purpose, whether to pay off your credit cards and high-interest debts or to fund home renovations and other expenses. Personal loans have an average APR around 10 percent if you have good to excellent credit, compared to 16 percent or higher for credit cards.

A personal loan can either be unsecured or secured by an asset such as the title to your vehicle. While secured loans may offer easier approval and lower interest rates, they also put the collateral asset at risk if you can no longer make payments.

Compare Personal Loans on LendingTree

Creditor Negotiation

You can also try to negotiate a lower interest rate or reduced fees directly with your credit card and loan companies. With this route, you can manage your debt without taking out a new loan.

To start creditor negotiation, call the customer service department for your credit card or loan. Ask about assistance programs for borrowers who have fallen behind on payments. Like debt settlement, creditor negotiation is rarely effective if you are current on all your accounts.

Home Refinance or Home Equity Line of Credit

If you own a home, you can potentially tap into the equity with a loan or line of credit to consolidate your debt. If you can qualify for a home refinance and have equity, a cash-out refinance involves taking out enough extra money from the new mortgage to repay your debt.

A home equity line of credit (HELOC) or cash-out refinance carries substantial risk because you could lose your property if you fail to repay the credit line. However, if you feel very confident about your ability to make payments as agreed, these refinance loans and credit lines typically have a lower interest rate than other debt consolidation options.

Retirement Fund Loan

If you have a 401(k), an IRA, or another type of retirement fund, you may be able to borrow from your own investments and repay the loan over time. Often, the company that holds your retirement fund charges a much lower rate than you can obtain for a debt consolidation loan. You also do not have to complete a traditional application, so a 401(k) loan does not require good credit and will not impact your score.

Read the fine print carefully before taking this route to consolidate your debt. If you lose your job, leave the company, or otherwise cannot repay the loan as agreed, you may be responsible for costly fees and penalties. At this point, you must pay back the entire balance, often by the tax deadline for that year. You also compromise your eventual retirement by reducing your savings.

Debt Management Plan

You can access this type of relief program, which involves making fixed monthly payments toward your debts, from a nonprofit credit counseling agency. You must be able to stick to the proposed payment plan recommended by the agency and refrain from using your credit cards while you are on the debt management plan.

Unlike a debt settlement plan, a debt management plan sends funds directly to your creditors. Rather than negotiating a lower balance, a dedicated financial counselor helps you qualify for lower interest rates and asks the lenders to waive fees and finance charges. As a result, debt management will not lower your credit score, which makes it a good choice if you have a high FICO rating and do not want to take on additional debt for consolidation.


What is the most reputable debt consolidation company?

Freedom Debt Relief ranks as the most reputable debt consolidation company because of its high level of accreditation, which reflects adherence to industry standards and ethics. In fact, U.S. News and World Report named Freedom as the top accredited debt relief firm. This company has AFCC and IAPDA Platinum certification as well as accreditation and a B+ customer rating from the Better Business Bureau.

Do banks offer consolidation loans?

Yes; you can apply for a personal loan for debt consolidation from traditional banks and credit unions, online lenders, peer-to-peer services, and many other funding sources. Keep in mind that some banks may only refer to personal loans and do not necessarily use the term debt consolidation loan.

Is it better to get a personal loan to pay off credit card debt?

A personal loan offers several advantages over credit card debt if you can qualify for this type of financing. Most personal loans have lower interest rates than credit cards. They also streamline your monthly payments and lower your credit utilization, both factors that help improve your credit and help you pay down debt. You can compare personal loan offers on sites like Credible and LendingTree.

What’s a good APR for a debt consolidation loan?

The lowest available interest rates for personal loans are about 5 percent. You may be eligible for a 5 to 10 percent APR for debt consolidation if you have an excellent (720 to 850) FICO score. Those in the good (690 to 719) FICO category may pay 10 to 20 percent interest, with rates of up to 36 percent for those who have fair (630 to 689) credit.

Is a debt consolidation loan bad for your credit?

The answer depends on a variety of factors, such as the amount of the loan and your overall financial profile. Debt consolidation requires repaying old debt with a new loan, which can increase your risk in the eyes of lenders and decrease your FICO score. However, paying off your old debts decreases credit utilization, which has a positive impact on your score.

What happens if you cannot make payments on a debt consolidation loan?

If you cannot pay your loan as agreed, talk to the lender as soon as possible to try to make new payment arrangements. If you end up defaulting on the loan by falling more than six months behind on payments, the lender can sue you and take other types of action to collect the money. Your credit score will also decrease and you may not be able to qualify for a loan or credit card for several years.