The Top 7 Debt Consolidation Loans in 2025: The Best Options Based on Credit Score, Plus How Much You Can Save

Debt consolidation loans can help you get a better handle on what you owe and streamline your monthly payments. Some people use personal loans for debt consolidation, while others leverage their home’s value with a home equity loan or line of credit (HELOC).

The best debt consolidation loans allow you to borrow the amount you need at an affordable interest rate, with a repayment term that fits your budget. We’ve researched the best loans for debt consolidation, and here are our recommendations.

Table of Contents

1. Best debt consolidation loans for 2025
2. What is a debt consolidation loan?
3. Pros and cons of debt consolidation loans
4. Eligibility requirements for a debt consolidation loan
5. Debt consolidation loan examples
6. Alternatives to debt consolidation loans
   1. Debt management plan (DMP)
   2. Balance transfers
   3. DIY methods
7. Find the best debt consolidation loan for your needs
8. FAQ

Best debt consolidation loans for 2025

LightStream

Best for Excellent Credit

4.8 _/5

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Why it’s one of the best

Lightstream personal loans are designed for borrowers with excellent credit. You can use Lightstream loans for virtually any purpose, including debt consolidation. Rates are competitive and there are no application fees, origination fees, or late payment fees.

The application process is entirely digital and some borrowers may be eligible to get their loan proceeds deposited into their bank account the same day they’re approved.

Rates (APR)	7.99%% – 25.49%%, varies by loan type and credit profile
Loan amounts	$5,000 – $100,000
Repayment terms	24 – 144 months
Min. credit score	660

Upstart

Best for Thin Credit

4.8 _/5

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Why it’s one of the best

A thin credit file could make it difficult to qualify for some debt consolidation loans. Upstart helps to solve that problem by lending to borrowers with limited credit history.

Rather than requiring a minimum credit score to qualify, Upstart considers your work history, education, and earning potential for approval decisions. You can get a rate quote without impacting your credit profile, and if approved, funds may be available as quickly as the next business day.

Rates (APR)	8.49% – 35.99%
Loan amounts	$1,000 – $50,000
Repayment terms	36 or 60 months
Min. credit score	None

What is a debt consolidation loan?

A debt consolidation loan is a loan that’s used to pay off credit cards, loans, and other debts. Here’s how it works, in a nutshell:

• You apply for a loan in the amount you need to pay off other debts.
• If approved, the lender releases the loan funds to you.
• You use the money to pay off your other debts, leaving you with one payment to make to the loan each month.

Debt consolidation loans may be unsecured or secured. Unsecured loans are not attached to collateral, while secured loans are. Typically, when you’re talking about debt consolidation loans you’re talking about one of these options:

• Personal loans 
• HELOCs 
• Home equity loans

HELOCs and home equity loans are second mortgages that you repay in addition to the mortgage you took out to buy the home. A HELOC gives you access to a revolving line of credit that works like a credit card. Home equity loans give you a lump sum that you can use to pay debts.

Unsecured personal loans can be attractive for debt consolidation if you don’t own a home or don’t want to have an additional mortgage payment.

When choosing a debt consolidation loan, I would look for the best (lowest) interest rate at the best terms. Compare the payments—really understand what your new loan payments will cost. I would also like to understand their service model if you need support or have questions. Can you call a live person, or is it all serviced via off-shore chat?

Pros and cons of debt consolidation loans

Debt consolidation loans are designed to help you get a better handle on your finances. Like other types of loans, there are pros and cons to consider when deciding if this is a good idea for you. 

Pros

• Fewer monthly debt payments

  Consolidating all your debt payments into one can help ease budgeting stress.

• Rates may be lower than what you’re currently paying

  If you consolidation loan rate is lower than what you pay to credit cards or other debts, you can save you more in the long-run in interest.

• Discounts may bring down the cost of the loan

• Some lenders offer repayment and due date flexibility

  Flexible repayment terms and the ability to choose your due date can make it easier to fit paying off debt into your full financial picture.

• Collateral not always required

  If your debt consolidation loan is unsecured, you don’t risk losing your home, car, or other belongings if you aren’t able to repay.

Cons

• Consolidation may be a band-aid solution at best

  If you continue to use credit cards after paying them off, you could find yourself in a worse debt situation than before you consolidated.

• Good to excellent credit is usually needed

  To get the lowest rates and best terms, you typically need good to excellent credit

• Lower rates are not guaranteed

  Just because you apply for a debt consolidation loan doesn’t mean you’ll qualify for a lower rate, making it crucial to crunch the numbers to ensure you’ll be saving in interest in the long run.

• Lenders may charge fees

  Lenders may charge application, origination, prepayment, and late payment fees that can cut into your savings.

• Debt consolidation loan interest is not tax-deductible

  In some cases, like when you use a HELOC to make home improvements, you can deducted the interest you pay on the loan on your taxes. This isn’t possible, however, if you use the funds to consolidate debt.

Eligibility requirements for a debt consolidation loan

Lenders determine eligibility for debt consolidation loans and requirements can vary greatly. Typically, the most important factors in loan decisions include:

• Credit scores
• Income
• Employment history
• Existing debt levels
• Home equity (if you’re applying for a HELOC or home equity loan)

You can raise your approval odds by reviewing your credit scores to see if there’s room for improvement. Paying down some of your existing debt, for example, could give you a slight score boost and potentially make you more attractive to a lender. Increasing your income with side hustles or part-time work could also make a difference.

Debt consolidation loan examples

How much could a debt consolidation loan save you? Here are two examples to help you decide.

Let’s say you want to refinance $50,000 in credit card debt. Your average APR is 21%, and you have a 720 credit score. Here’s what you might pay with a personal loan versus a home equity loan—and how that compares to doing nothing at all.

Option	APR	Monthly payment	Total interest	Total cost
Credit cards (5 yrs)	21%	$1,352	$31,160	$81,160
Credit cards (10 yrs)	21%	$999	$69,959	$119,959
Personal loan (5 yrs)	8.50%	$1,025	$11,550	$61,550
Home equity loan (10 yrs)	8.50%	$620	$24,391	$74,391

Alternatives to debt consolidation loans

Debt consolidation loans are one possible solution if you want to get a handle on debt. Here are some alternatives you might consider instead.

Debt management plan (DMP)

A debt management plan is a structured plan for paying off credit cards that you set up through a credit counselor. You make a single payment to the credit counselor who distributes it to your creditors. Your creditors may agree to waive certain fees or lower your interest rate, though you’ll likely have to close your accounts to enroll in the plan. 

Balance transfers

A balance transfer allows you to move a balance from one credit card to another, typically to qualify for a low or 0% APR for a set period. You could pay no interest if you pay the balance off before the promotional rate period ends. 

DIY methods

The debt snowball and debt avalanche are two ways to repay debt without a consolidation loan. With the snowball method, you pay your debts off from lowest balance to highest, paying as much as you can to the first debt while paying the minimum to everything else. The avalanche method works the same way, except you pay debts off from the highest APR to the lowest. 

When considering if a debt consolidation loan is right for you, ask yourself: Have you tried other methods for debt reduction, like the snowball or avalanche method? Can you take a side hustle while you pay down debt? Decrease your expenses. Do “poverty months” where you live on the bare minimum while you pay debt. Cut out everything extra. Gamify it. You’ll feel great once you’re done! And if you still really need help, consult with a credit counselor who can help you navigate your options. No one really learns personal finance in the U.S. (unfortunately), and life happens. So be proactive, motivate, learn, improve your credit score after paying your debts down, and try not to incur bad debt in the future (vs “good debt,” like mortgage debt).

Find the best debt consolidation loan for your needs

If you’re thinking of getting a loan for debt consolidation, first consider whether it makes more sense to choose a personal loan or tap into your home equity. Then, shop around to compare loan limits, interest rates, fees, repayment terms, and eligibility requirements. A little research can go a long way toward helping you find the best lender to work with.

FAQ

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

Most lenders look for a credit score of at least 580 to 600, but a score of 670 or higher gives you better approval odds and access to lower interest rates.

If your score is in the good-to-excellent range (typically 670+), you’re more likely to qualify for competitive offers. Some lenders also consider other factors like your income, debt-to-income ratio, and credit history.

Are there debt consolidation loans for bad credit?

Yes—but your options may be limited, and rates will be higher.

Some lenders specialize in working with borrowers who have bad credit (typically under 580). You may still be able to get a loan, but expect stricter terms and higher interest rates. Adding a co-signer or applying for a secured loan may help improve your chances and lower your rate.

Is there a downside to using a home equity loan to consolidate debt?

Yes. While rates are often lower, your home is at risk if you can’t repay the loan.

Home equity loans are secured by your home, so defaulting could lead to foreclosure. You may also pay closing costs and fees, and the longer repayment term could increase the total interest paid—even if the monthly payments are lower.

Does a personal debt consolidation loan hurt your credit?

It may cause a small dip at first, but it can help your credit in the long run.

Applying for a loan triggers a hard credit check, which can temporarily lower your score. However, if you use the loan to pay off revolving debt (like credit cards), you may see a credit score boost over time—especially if you keep your old credit lines open and make all loan payments on time.

How we chose the best debt consolidation loans

Since 2017, LendEDU has evaluated personal loan companies to help readers find the best personal loans. Our latest analysis reviewed 1,029 data points from 49 lenders and financial institutions, with 21 data points collected from each. This information is gathered from company websites, online applications, public disclosures, customer reviews, and direct communication with company representatives.

These star ratings help us determine which companies are best for different situations. We don’t believe two companies can be the best for the same purpose, so we only show each best-for designation once.

_{¹ Rates for personal loans provided by lenders on the Credible platform range between 6.94% – 35.99% APR with terms from 12 – 120 months. Credible also works with network Partners like MoneyLion and AmONE, who offer loan and other products with different rates and terms than described here. Rates presented include lender discounts for enrolling in autopay and loyalty programs, where applicable. Actual rates may be different from the rates advertised and/or shown and will be based on the lender’s eligibility criteria, which include factors such as credit score, loan amount, loan term, credit usage and history, and vary based on loan purpose. The lowest rates available typically require excellent credit, and for some lenders, may be reserved for specific loan purposes and/or shorter loan terms. The origination fee charged by the lenders on our platform ranges from 0% to 12%. Each lender has their own qualification criteria with respect to their autopay and loyalty discounts (e.g., some lenders require the borrower to elect autopay prior to loan funding in order to qualify for the autopay discount). All rates are determined by the lender and must be agreed upon between the borrower and the borrower’s chosen lender. For a loan of $10,000 with a three year repayment period, an interest rate of 7.99%, a $350 origination fee and an APR of 10.43%, the borrower will receive $9,650 at the time of loan funding and will make 36 monthly payments of $313.32, assuming your lender deducts the origination fee from the offered loan amount. Assuming all on-time payments, and full performance of all terms and conditions of the loan contract and any discount programs enrolled in included in the APR/interest rate throughout the life of the loan, the borrower will pay a total of $11,279.43. As of March 3, 2022, none of the lenders on our platform require a down payment nor do they charge any prepayment penalties.}

² SoFi Platform personal loans are made either by SoFi Bank, N.A. or , Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender. SoFi may receive compensation if you take out a loan originated by Cross River Bank. These rate ranges are current as of 3/06/23 and are subject to change without notice. Not all rates and amounts available in all states. See SoFi Personal Loan eligibility details at https://www.sofi.com/eligibility-criteria/#eligibility-personal/ . Not all applicants qualify for the lowest rate. Lowest rates reserved for the most creditworthy borrowers. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, income, and other factors.

Loan amounts range from $5,000– $100,000. The APR is the cost of credit as a yearly rate and reflects both your interest rate and an origination fee of 9.99% of your loan amount for Cross River Bank originated loans which will be deducted from any loan proceeds you receive and for SoFi Bank originated loans have an origination fee of 0%-7%, will be deducted from any loan proceeds you receive.

Autopay: The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Autopay is not required to receive a loan from SoFi.

Direct Deposit Discount: To be eligible to receive an additional (0.25%) interest rate reduction on your Personal Loan (your “Loan”), you must set up Direct deposit with a SoFi Checking and Savings account offered by SoFi Bank, N.A., or enroll in SoFi Plus by paying the SoFi Plus Subscription Fee, all within 30 days of the funding of your Loan. Once eligible, you will receive this discount during periods in which you have enabled Direct Deposit to an eligible Direct Deposit Account in accordance with SoFi’s reasonable procedures and requirements to be determined at SoFi’s sole discretion, or during periods in which SoFi successfully receives payment of the SoFi Plus Subscription Fee. This discount will be lost during periods in which SoFi determines you have turned off Direct Deposit to your Checking and Savings account or in which you have not paid for the SoFi Plus Subscription Fee. You are not required to enroll in Direct Deposit or to pay the SoFi Plus Subscription Fee to receive a Loan.