How do you qualify for an online debt consolidation loan when you have a bad credit rating?

It will not be easy. You must be able to demonstrate that you will repay the money to the new company with interest according to terms.

Someone with very poor credit cannot afford to be too choosy. Do not limit your options by looking only at debt consolidation loans from direct lenders, or without collateral or a guarantor.

You may find that doing the opposite works better in the end. For example, many more people are eligible for a settlement program that can significantly reduce the amount of money you must repay. In addition, brokers and lead services expand options.

Debt Consolidation Loans No Collateral

Qualifying for a debt consolidation loan online with no collateral is more difficult when you have a bad credit history. Without collateral to back the obligation, the online financier faces a greater risk of default. This means that you have two strikes against you.

Do you qualify for debt relief? If you owe more than $10,000 in unsecured debt (credit cards and personal loans) then a settlement program could be a more suitable approach.

  • The company does not require collateral to enroll in the program.
  • There is no minimum credit score requirement.
  • Financial hardship is also important to suitability.

Unsecured Loans

Unsecured debt consolidation loans do not require collateral for low credit score prospects. The creditworthiness of the borrower backs the obligation, and the collection agency cannot repossess an asset without first filing a lawsuit.

People with adverse payment history will find it more difficult to qualify for an unsecured debt consolidation loan. A promise to pay on time from borrowers with very poor credit worthiness is not strong backing without collateral. In addition, any collection agency must file and win a lawsuit to compel payment in the event of a default.

Request an unsecured debt consolidation loan here. After completing the online form the affiliate company will present your credentials to a network of finance companies who may wish to extend an offer. Volume helps your chances of achieving lower monthly payments.

Personal Loans

Personal debt consolidation loans for bad credit rating borrowers are unsecured. Therefore, they do not require collateral. Only the signature of the individual backs them. The signature is a promise to repay the entire amount on time with interest.

As we have already seen, this signature promise is not very strong if you have an adverse payment history. You must overcome this disadvantage somehow. Volume is one way to increase approval odds.

Request a personal debt consolidation loan here. Complete the online form to have your credentials presented to a network of subprime lenders. These companies specialize in consumers with poor eligibility. While the odds of approval at any single entity are very low, the cumulative odds are much better when many bankers see your profile.

Secured Debt Consolidation Loans

Qualifying for secured debt consolidation loans is easier for borrowers with bad credit history. In the event of default, the lender can repossess the asset pledged to secure the obligation. The company can then sell the asset to recoup some of its losses.

This means that homeowners and rental tenants have greater odds of approval. However, they also risk losing the pledged asset in the event of default, so proceed carefully.


Secured debt consolidation loans for non-homeowners with bad credit ratings rely on equity in an automobile. Rental tenants cannot pledge a lease on an apartment, townhouse, condominium, or home as collateral.

Get an auto loan in one minute! Refinancing an automobile is one way for tenants with adverse payment history to obtain a secured debt consolidation loan.

Keep in mind that the wholesale value of your car must exceed the outstanding balance on any existing car note. In addition, the finance company has the right to repossess your vehicle should you default. They do not need to file a lawsuit first.


Secured debt consolidation loans for homeowners with poor credit scores take advantage of the equity of their real estate property. Homeowners can choose between a mortgage refinance and a home equity line of credit.

Both options mean you risk losing your home in the event of default. This risk is much higher for borrowers with adverse payment history. In addition, mortgage companies employ additional underwriting criteria – which can protect sub-prime borrowers from gambling away their primary residence.

  • Loan to value ratio (LTV) – is the percentage of home equity that remains after the new contract closes.
  • Debt-to-income ratio (DTI) – is the percentage of monthly income compared to the projected new monthly payment.

With both forms of secured homeowner loans, a lower LTV and DTI helps approval odds. Using real estate holdings as collateral also allows for longer repayment terms. This means lower monthly payments and a better DTI. Consult your accountant for advice on whether the interest is tax deductible.

Debt Consolidation Loans Direct Lenders

You may be looking for a debt consolidation loan with direct lenders only. People with a terrible credit score are not in the driver’s seat. You may not be able to dictate terms and limit your search to direct lenders, no broker, no guarantor, or online decisions only.

Guaranteed approval is completely unrealistic – even for those with stellar qualifications.

Free debt consolidation quote. Direct lenders often target individuals with stellar borrowing credentials and a smaller amount of existing obligations. You could wind up submitting multiple direct lender applications without success. Combine your monthly bills into a settlement fund instead. Attempt to reduce what you owe instead of restructuring terms.

No Brokers

Seeking a debt consolidation loan with no brokers limits approval chances for those with bad credit ratings. Captive agents are not brokers. Direct lenders are a single company. If that one company does not specialize in sub-prime borrowers with your specific profile, you miss the mark.

Brokers may actually work better for you. Brokers may increase your chances of finding the funding you want. They represent multiple lenders and understand the differences in underwriting philosophies. They can market your qualifications to many finance companies specializing in consumers with your profile.

In the end, you work with a direct lender who funds the contract.

No Guarantor

Likewise, those with a very low credit score will find it very difficult to gain approval for a bill consolidation loan with no cosigner or guarantor. A cosigner or guarantor agrees to make payments in the event that the primary borrower is unable to do so.

Without a cosigner or guarantor, the lender faces a far greater risk of default. If two heads are better than one, then two responsible parties are more reliable. Applying for a debt consolidation loan without a cosigner makes your already weak credentials less appealing.

Online Decision

Quick and easy online decisions on a debt consolidation loan are another set of unrealistic expectations for people with a very poor credit rating. When you have a history of lateness, gaining a fast online positive verdict is unlikely to happen. A declination is the most likely decision.

  • You must also show sufficient income to cover your combined monthly payment. The underwriter will calculate a debt-to-income (DTI) ratio. The DTI takes your monthly gross income and divides that into your projected monthly amount for all your accounts.
  • You must also demonstrate reliable earnings. The lender needs assurance that your earnings are likely to continue into the future. Having no job or collecting unemployment compensation does not help your qualifications.
  • People with accounts in collections have an especially difficult time gaining an online yes decision. If lucky enough to pass the initial criteria, expect to provide additional documentation regarding extenuating circumstances.

You cannot obtain a fast online yes decision when you have to fax copies of paystubs and other work-related documentation. The underwriter could also ask to verify employment.

No Guaranteed Approval

No lender can guarantee approval on a debt consolidation loan to someone with bad credit rating. A certain declination is the most likely outcome for most people.

Applicants must meet minimum credit score, income, and employment qualifications. Lenders only approve applications when they have a strong sense that the borrower has the capacity and intention of paying all the money back with interest.

Steer away from any website touting guaranteed approval for any loan. This is another unrealistic expectation. The publisher may meet industry compliance standards.