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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.

Enrolling in a settlement program has a better chance of success than getting a lender to approve an unsecured loan.

Debt Consolidation Programs

Do you qualify for debt relief? Debt consolidation (settlement) programs offer an alternative to borrowing money via unsecured contracts. The qualifications are much easier, and applicants can often reduce the amount of money they owe over time.

If you owe more than $10,000 in unsecured debt (credit cards, medical bills, or payday 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 Personal Loans

Unsecured personal loans for debt consolidation 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.

Only the signature of the individual backs an unsecured personal loan. The signature is a promise to repay the entire amount on-time with interest. However, this signature promise is not very strong if you have an adverse payment history.

Without collateral to back an unsecured personal loan, the lender has fewer options in the event of default. The company cannot repossess a car, home, or sell your jewelry. They must hire a collection agency to file a lawsuit. The judge may issue a lien or agree to garnish wages. This process is more expensive and takes a long time to bear fruit for the lender.

Therefore, expect lenders to be very choosy when evaluating unsecured personal loans for debt consolidation. People with bad credit find it difficult to qualify. A wide network of non-prime lenders helps your cause.

Debt Consolidation Loans Online Decision

Debt consolidation loans for bad credit borrowers offering online decisions make the process easier. It is impractical for people to complete paper-based applications at multiple brick and mortar banks. In addition, the odds of approval are not high.

Submit an online debt consolidation loan request instead. Non-prime online lenders offer an indirect loan request process and a quick web-based decision. Learn the tricks of making their verdict an approval.

Online Application

Words matter. Bad credit debt consolidation loans with an online application lead to no underwriting decisions. Borrowers make online submissions to only one lender at a time. Each entry results in a hard inquiry, which hurts credit scores further and sends up red flags.

People with poor qualifications often find an online ping-tree decision process works much better.

  • Avoid the logging of multiple hard inquiries
  • A broad network of lenders sees your borrowing resume
  • Volume improves the odds of approval

Complete the online application only after reviewing any offers.

Online Approval

Here are the tricks for making the bad credit debt consolidation loan online decision an approval. The borrower should show compensating factors to as many non-prime lenders as possible – without logging multiple hard inquiries.

A bad credit borrower needs to shows several compensating factors in order to overcome the negative history. Qualify for an online approval decision by balancing your resume.

  • Show sufficient income to cover your combined monthly payment. The DTI takes your monthly gross income and divides that into your projected monthly payment for all your accounts.
  • Demonstrate reliable earnings. Solid work history shows that wages are likely to continue into the future.
  • Share your bank routing number and account number. This allows the lender to debit the account once a month to ensure prompt reliable payment.

Debt Consolidation Loans Direct Lenders Online

Restricting your search to bad credit debt consolidation loans from direct lenders online may not be the best approach. Intermediaries such as brokers and lead aggregators make it easier for people with poor qualifications to find a willing partner.

Start an online debt consolidation loan request here. An intermediary will capture your qualifications and market your profile to a network of direct lenders. Allow many possible investors to view your resume without logging a hard inquiry. High-risk borrowers need a volume of non-prime providers.

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 an online direct lender who funds the contract.

Guaranteed Acceptance

No online direct 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 accept high-risk borrowers when they have a strong sense that the person has the capacity and intention of paying all the money back with interest.

High acceptance rates are a more reasonable expectation – although a declination is still more likely. Steer away from any website touting everyone accepted. The publisher may meet industry compliance standards.

No Guarantor

Bad credit debt consolidation loans through direct lenders with no guarantor or cosigner limits possibilities further. 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 ultimate online lender faces a far greater risk of default. If two heads are better than one, then two responsible parties are more reliable. Either of these combinations is more realistic.

  1. Direct lender with guarantor or cosigner
  2. Broker or lead aggregator without guarantor or cosigner

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.

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 subprime 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.