What credit score do you need to consolidate debt?

Taking a look at debt consolidation means you’re already moving in the right direction. Instead of juggling a bunch of stressful payments, you could roll them into one that costs less and is easier to keep up with. It won’t fix everything overnight, but it could make things feel a lot less overwhelming—and that’s a big step forward. 

Your credit score is one of the first things lenders look at when you apply for debt consolidation. You’ll need good enough credit to qualify for a loan. A less-than-perfect credit score doesn’t erase your chance to move forward—it’s just a starting point, not the end of the story. You’ve still got plenty of options. 

Let’s learn more about what credit score is needed for debt consolidation and how different factors might affect it. 

Achieve is not a Credit Repair Organization and does not provide, or offer, services or advice to repair, modify, or improve your credit.

What credit score do you need to qualify for a debt consolidation loan?

If your credit score is in the mid-600s or higher, you could qualify for debt consolidation. Here’s a quick chart to help you explore your options:

How hard is it to get approved for a debt consolidation loan with a low credit score?

It’s difficult—but not impossible—to get approved with a low credit score. After all, lenders look at more than just your credit score. That’s encouraging. It means that even if you have a low credit score, you might still get a debt consolidation loan. 

The opposite is also true. Meeting the minimum credit requirements doesn’t mean you’ll get any loan you want. You need to meet your lender’s other loan requirements, too. 

If you have a strong, steady income, for example, some lenders will approve your loan application even with a lower credit score than they’d typically accept. And on the flip side, if you have a high credit score but spottier income, some lenders may turn you down for a loan. 

Does debt consolidation require a credit check?

Yes, lenders will check your credit before you can take out a debt consolidation loan. This can happen in two ways. First, most lenders will use a soft credit check if you’re just getting prequalified for a loan. This lets you check your rate and loan options without any impact to your credit score because you’re just comparing rates and not‌ applying yet. 

Next, lenders will do a hard credit check if you apply for a loan. This credit check can impact your credit score because it shows other lenders that you’re taking the next step and‌ applying for a loan. In other words, it’s a bigger commitment. 

A hard credit check could impact your credit score, but you generally don’t need to worry too much. It usually only lowers your credit score by a few points, and only temporarily. (You’ll still have it on your credit report for two years, but it won’t impact your score after a year.) 

Still, it’s smart to avoid applying for lots of loans over a long period of time. That’s why experts recommend you research lenders before you apply and compare all your loan possibilities within a few weeks. 

What do lenders look at besides your credit score?

Your credit score is just one factor  when it comes to getting approved for debt consolidation. In some cases, you could overcome a low credit score if you have a strong showing in other areas. 

Here are other factors that lenders will consider:

• Income. A higher and more stable income could help you get approved. 

• Collateral. Some lenders allow you to pledge collateral for the loan, like a savings account or vehicle. If you don’t pay back the loan, they can keep your collateral. Collateral is required for some loans, like home equity loans. 

• Co-signers. Some lenders may approve your loan if you can get someone with better credit to sign as a backup to repay the funds if you can’t. 

• Payment history. A long history of paying your bills on time, with as few missed payments as possible, could help increase your approval odds. 

• Debt-to-income ratio. A low debt-to-income ratio could help. This ratio measures how much of your paycheck goes toward debts and housing each month. 

What if your credit score is too low to qualify for a debt consolidation loan?

Not everyone has the credit score needed for a debt consolidation loan, and that’s okay. In fact, it might be a silver lining, because lots of other options might work better. 

Here are a few other ways to handle your debt that don’t rely on your credit score at all.

Credit counseling

Anyone can complete a free one-on-one credit counseling session with a nonprofit credit counseling agency. Many people find it helpful to have a second pair of eyes checking their financial details and offering potential solutions. 

Credit counseling agencies offer a debt management plan, or DMP, for a small monthly fee. The agency will negotiate lower interest rates with your creditors. Your job is to send one monthly payment to the agency, which then sends it out to each creditor until your debts are all paid off. The payment is typically high because it’s designed to fully pay off your debts within three to five years. You’ll be asked not to use credit cards while you’re in the plan. 

Debt relief

Debt relief could be a good option if you don’t want to go through bankruptcy but aren’t able to repay your debts within five years. Debt relief, or debt resolution, is when your creditor agrees to accept less than the full amount you owe and forgive the rest. You can negotiate with lenders yourself or work with a professional debt relief company that will negotiate for you.  

Debt relief isn’t right for everyone, nor is it an easy way out. But it could significantly reduce your debt. Many people find it very helpful in managing high debt levels. 

Related: How does debt relief work?

Bankruptcy 

Bankruptcy is a legal process for dealing with debt. It may be the best way to get rid of eligible debts if you qualify.

Bankruptcy is a complicated legal process, and it’s usually best to hire a lawyer who can represent you. Legal clinics and reduced-fee legal services could help if you have a low income. 

How to improve your chances before applying for a debt consolidation loan

Everyone could use a little extra help sometimes, no matter what kind of credit score we have. Here’s a quick checklist of things to do before you apply for a loan. This can give you more confidence going forward because you’ve done your research and know what to expect. 

• Pay down what you can toward your high-interest debts, even if it’s just a little bit.

• Check your credit reports and fix any errors you find. 

• Put all your bills on autopay so you don’t miss any payments at the last minute.

• Hold off on applying for other loans until after you’re done applying for debt consolidation loans. 

• Consider backup options before you apply, so you know whether it’s really the best option for you. Also, you’ll be ready for other steps if you’re not approved. 

What’s next?

• Check your credit score. 

• Get a copy of your credit report and make sure everything’s correct. 

• Gather at least three debt consolidation rate quotes to compare. 

• Don’t beat yourself up if you’re not approved right away. You still have lots of options.