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How To Get A Debt Consolidation Loan In 5 Simple Steps

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how to get a debt consolidation loan in 5 simple steps

How to Get a Debt Consolidation Loan in 5 Simple Steps

Debt consolidation is good only if it favors you so if you think it will be a good option for you then waste no time and stop paying higher fees on your current debt and opt for one that will have lesser fees, better interest rate and better terms.
To make your search easier for you, we have compiled a list of five simple steps to help you get a debt consolidation loan.


  1. Check your credit score
  2. List your debts and payments
  3. Compare loan alternatives
  4. Apply for a loan
  5. Close the loan and make payments

A personal loan for debt consolidation can condense several high-interest obligations into one payment and help you pay off debt more rapidly.

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Here’s How to Get a Debt Consolidation Loan in 5 Simple Steps.

Check your credit score

Start by verifying your credit score. Borrowers with good to exceptional credit scores (690 to 850 FICO) are more likely to gain approval and get a cheap interest rate.

Ideally, the new debt consolidation loan has a lower rate than the combined interest rate on your existing loans. A lower rate cuts the overall cost of your loan and can help you get out of debt faster.

If you have weak credit (300 to 629 FICO) and can take some time to build your credit, you may qualify for a lower-rate loan. Here’s how:

Catch up on late payments. Late payments are reported to credit bureaus at 30 days past due, which can reduce your credit score by as many as 100 points.
If you’re within the 30-day window for a debt payment, there’s still time to file it.

Check for credit report mistakes. Errors on your credit report, such payments applied to the wrong bills or accounts mistakenly marked cancelled, could be damaging your score.
Check your credit reports for free at AnnualCreditReport.com and challenge any mistakes you notice.

Repay modest debts. Debts due account for 30% of your credit score. If you can, pay down any high-interest credit cards before you begin to consolidate.
This can improve your debt-to-income ratio, which can help you secure a cheaper rate on the consolidation loan.

List your debts and payments

Make a note of the bills you wish to combine – credit cards, store credit cards, payday loans and other high-interest obligations — and sum up the total amount owing.
You’ll want your debt consolidation loan amount to cover the sum of these bills.

Add up the amount you pay each month toward your debts, and verify your budget for any spending adjustments needed to continue debt repayments.
The new loan should have a cheaper rate and a monthly payment that fits inside your budget. Commit to a repayment strategy with your budget in mind.

Compare loan alternatives

Shop for a loan that’s perfect for you. Online lending platforms, credit unions and banks all provide personal loans for debt consolidation.

Online lending platforms cater to borrowers with all ranges of credit. Most online lenders enable you pre-qualify so you may compare specific prices and conditions with no impact to your credit score.

Credit unions are not-for-profit organizations that may offer lower rates to borrowers with weak credit.
You must become a member to apply for a loan, and many credit union loans require a hard draw with your application, which can temporarily harm your credit score.

Bank loans work best for people with good credit, and consumers with an established banking relationship may qualify for a rate discount.

Look for lending platforms that offer direct payment to creditors, which simplifies the consolidation process.
After the transaction closes, the lender transfers your loan funds to your creditors at no extra expense.

Consider extra services that some lenders provide, such a rate savings for setting up autopay, access to your credit score or free financial education.

Apply for a loan

When you are prepared to apply for the loan, gather documents such as proof of identity, proof of address and income verification.

Take the time to read the loan document’s fine print. Any extra costs, prepayment penalties and whether the lender reports payments to the credit bureaus might damage your credit score as well as the total cost of the loan.

If you don’t meet the lending platform’s requirements, consider adding a co-signer with good credit to your application.
This can help you get a loan that you wouldn’t qualify for on your own.

Close the loan and make payments

Now that you’ve identified and been accepted for the loan you want, there’s one critical step left.

If the lender offers direct payment, it will divide your loan proceeds among your creditors, paying off your old debts.
Check your accounts if you have a zero balance or call each creditor to ensure the accounts are paid off.

If the lender doesn’t pay your creditors, then you’ll refund each loan using the money that’s deposited to your bank account.
Do this straight away to avoid further interest on your prior loans and to eliminate the temptation to spend the loan money on something else.

Finally, within around 30 days of getting the debt consolidation loan, make your first payment.

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Here are a Few Options On WhereTo Get a Debt Consolidation Loan From

Best Egg

Min. credit score: Not disclosed
Fixed APR From: 5.99%
Loan amount: $2,000–$50,000
Term lengths: 3 to 5 years
Min. yearly income: $0

Best Egg offers unsecured personal loans for a range of objectives, including debt consolidation. If you have a credit score of at least 640, you may qualify based on other requirements, such as income.
Best Egg’s debt consolidation loans have a range of $2,000 to $50,000.
The best rates and terms go to borrowers who earn $100,000 or more and have a credit score of at least 700, which is “good” on the FICO scale.


  • No penalty if is attracted if you pay off your consolidation loan ahead of schedule
  • Direct payment for credit card debt consolidation
  • Flexible due date


  • Loan facts such as terms and rates are not clear on website.
  • $15 returned payment fee
  • APRs as high as 35.99%

Happymoney: Payoff

Min. credit score: Not disclosed
Fixed APR From: 5.99% –24.99%
Loan amount: $5,000–$40,000
Term lengths: 2 to 5 years
Min. yearly income: $30,000

Payoff is specifically developed for individuals who desire to pay off their credit card debt. The application and approval process are all done online.
Payoff’s personal loans can be used just to consolidate credit card debt, and you can do it without needless costs.


  • No application, prepayment, late or annual costs
  • Free FICO Score per month
  • Borrowers can adjust payment due date once per 12 months


  • Origination fees up to 5 percent
  • Low maximum loan amount
  • No joint applicants


Min. credit score: Not disclosed
Fixed APR From: 5.73%
Loan amount: $5,000–$100,000
Term lengths: 2 to 6 years
Min. yearly income: $50,000

LightStream provides personal loans for a wide range of purposes, including debt consolidation. It distinguishes out for giving loans up to $100,000 and periods of up to 84 months – greater loans and longer maturities than what other lenders provide.
You must have good credit and sufficient assets and income to qualify for a jumbo-size personal loan.
LightStream offers unsecured, fixed-rate debt consolidation loans as big as $100,000, with up to seven years to score.


  • No penalties for paying off your debt consolidation loan early
  • Rate beat program
  • Loan experience guarantee feature


  • Loans without automatic payment have interest rates that are 0.5 percentage points higher
  • No prequalification option
  • No due date flexibility


Min. credit score: Not disclosed
Fixed APR From: 7.74% –17.99%
Loan amount: $500–$50,000
Term lengths: 1 to 5 years
Min. yearly income: $0

Pentagon Federal Credit Union, commonly known as PenFed, offers unsecured, fixed-rate personal loans for debt consolidation.
While you’ll need to become a member of the credit union in order to get loan funds, you can do so by creating a savings account with a $5 initial deposit.
You can borrow as little as $600 with PenFed, and credit unions frequently offer more customized service than larger banks.


  • No origination fees, yearly fees or prepayment penalties
  • Online and in-person alternatives
  • Loan approval in as little as one business day.


  • PenFed membership and savings account necessary
  • No cosigners allowed
  • Membership costs

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