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How to Get a Debt Consolidation Loan in 6 Steps
September 11, 2026
September 11, 2026
If you're juggling several credit card or personal loan payments each month, a debt consolidation loan might simplify things. You borrow enough to pay off those debts, then repay one loan at one fixed rate with one due date.
Credit card minimum payments are designed to stretch your payoff for years. The average credit card carries a 22.15% APR, while a personal loan averages 11.86%. If it's the right fit, a consolidation loan can cost less in interest overall. Just make sure you're financially ready before taking one out.
Expert Take: As of the end of June, 4.7% of outstanding household debt was in some stage of delinquency, down slightly from the prior quarter. Lenders price consolidation loans based on payment history, so staying current is worth real money. Applying while every account is paid up keeps the better rate available.
This guide walks through the six steps to get one, from checking your credit to paying off your balances.
A debt consolidation loan is a new fixed-rate loan or line of credit that you use to pay off several existing debts. You don't get out of debt with one; you simply move into one payment, ideally with a lower interest rate.
Most consolidation loans are unsecured personal loans, requiring no collateral. Secured options like a home equity loan exist too, but they put an asset like your house at risk if you fall behind. Paying off your cards also lowers your credit utilization, a second, less obvious way consolidation helps your score.
Debt consolidation can be a good idea for someone who is carrying credit card debt on one or more high-interest accounts, and who can qualify for a loan at a rate significantly lower than that on their credit card(s).
You get a debt consolidation loan in six steps: check your credit, add up your debts, run the savings math, compare and prequalify with lenders, apply with your documents, and pay off your balances.
Each step below expands on what to do and what to expect:
First thing I would do is pull your credit report. Even with high debt, you can still have a decent credit rating, and that rating is probably going to determine the interest rate you get on any kind of loan. That's knowledge.
You can get free reports from all three bureaus at AnnualCreditReport.com, the federally authorized source.
Review your report for errors, like accounts you don't recognize or balances that look wrong, and dispute anything inaccurate before you apply. Correcting mistakes costs nothing but time, and a better score means better offers.
List every balance you want to consolidate along with its APR and minimum payment, then total them to size your loan. Credit cards, personal loans, and medical bills are all commonly eligible.
Debt | Balance | APR | Minimum Payment |
Credit card A | $6,500 | 22.90% | $195 |
Credit card B | $4,200 | 19.99% | $126 |
Medical bill | $2,300 | 0% | $100 |
Personal loan | $2,000 | 14.50% | $95 |
Total | $15,000 | $516 |
Expert Tip: Prioritize your highest-APR balances, since those cost you the most each month. This total is the amount you'll aim to borrow, and it becomes the baseline you'll measure any loan offer against.
Compare your current blended rate and monthly cost against a consolidation loan, and check your debt-to-income ratio (DTI) before you commit.
Your DTI is your monthly debt payments divided by your gross monthly income. Lenders use your DTI to gauge whether you can handle a new payment, a lower ratio generally means better approval odds and rates.
For example, say you owe $15,000 in credit card debt at the average 22.15% APR. Consolidating that into a three-year personal loan near 11.86% APR would cost about $497 a month, with a fixed payoff date:
Detail | Credit Cards (Before) | 3-Year Consolidation Loan (After) |
Balance | $15,000 | $15,000 |
APR | 22.15% | 11.86% |
Payment | Multiple minimums | One fixed payment, about $497/month |
Interest cost | About $3,300 in year one, on a balance that isn't shrinking | About $2,900 total over three years |
Payoff date | Open-ended | Fixed at 36 months |
In this example, three years of loan interest costs roughly what a single year on the cards would.
Prequalifying doesn't hurt your credit. Most experts suggest prequalifying with at least three lenders using soft credit checks, then comparing the terms and APR on each offer. Banks, credit unions, and online lenders offer similar types of loans, but rates, fees, and funding speed will likely differ.
Important: The lowest advertised rate isn't always the lowest true cost once you include fees.
When you line up offers, weigh four things:
APR
Fees (origination charges)
Loan terms
Monthly payment
Submit one full application with your income and identity documents once you've picked the best offer. Lenders typically ask for:
Government-issued ID
Proof of income (pay stubs or tax returns)
Details on the debts you're paying off
Applying triggers one hard inquiry, which typically drops a FICO score by fewer than five points and should rebound within months, according to Experian.
From My Experience: I ran my own profile through half a dozen consolidation lenders to see where I would land. The APRs were within a few points of each other, but the terms varied, from 24 to 84 months, and that turned out to matter more. A longer term meant a lower monthly payment, but more interest paid over the life of the loan.
Expert Tip: Pull quotes from a few debt consolidation lenders, line them up side by side, then measure them against what you're paying now. Online lenders are usually fastest, though a credit union may beat them if you're a member.
Use the loan funds to pay off each balance immediately, then commit to not running the cards again. Some lenders will pay your creditors directly. If yours doesn't, transfer the money and clear each account the day the loan funds arrive. Setting up autopay on the new loan helps you avoid a missed payment.
"I would recommend a budget app so they can see day-to-day, week-to-week what they're spending their money on. And sometimes that is embarrassing for everyone who does it, no matter your financial status. When you see what you're spending your money on, you're like, oh my gosh, why am I spending that much on whatever it is," said Hess.
Debt consolidation loans can hurt your credit if you can't make timely payments and/or you run up more debt while you are paying back your loan.
Paying off your cards lowers your credit utilization, one of the biggest factors in your score, and making on-time loan payments builds positive history. In short, the loan itself is a minor, short-lived hit, while the habits it enables can move your score in the right direction.
What you do next depends on where your credit and budget stand today.
Good credit, low DTI: You're positioned for the most competitive rates, so act on your prequalified offers while your numbers are strong.
Fair or lower credit: Approval is still possible, but expect higher rates. A co-signer or a credit union may help, and it's worth reviewing debt consolidation loans for bad credit before you commit.
Homeowner weighing home equity: A secured loan may offer a lower rate, but it puts your home at risk if you fall behind, so compare it against unsecured offers before deciding.
"Let's assume your credit card rates are 22% on all three. If you can get a home equity line at 8% or 9%, that is a huge amount of money that is not going to interest, and that's more money going toward principal," said Hess.
Turn the six steps into action with a few concrete moves. If you're still deciding, read our take on whether debt consolidation is a good idea for your situation, then review how to choose a debt consolidation loan so you know which type fits.
When you're ready to compare real APRs, terms, and monthly payments, look at our best debt consolidation loans. Then build your own debt inventory and savings comparison using your actual balances and APRs, so the numbers reflect your situation before you prequalify.
There's no single cutoff, but higher scores typically earn lower rates, and the most competitive offers go to borrowers with strong credit and a lower debt-to-income ratio.
It's possible, but it gets harder because lenders weigh recent late payments heavily, and some will decline an application outright. If you're already behind, a nonprofit credit counselor may be a better first call than a lender.
Each has trade-offs on rate, fees, and speed, so prequalify with more than one and compare offers by APR before you choose.
Prequalifying can take minutes, and after you submit a full application with your documents, many lenders can approve and fund within a few business days if not sooner. Timelines do vary.
We built this guide by analyzing what currently ranks and what AI systems cite for this topic, then filled the gaps with primary data. No BestMoney first-party survey exists for debt consolidation, so we relied on published third-party and regulatory sources: the Federal Reserve, the Federal Reserve Bank of New York, and Experian.
Where a figure came from a secondary or competitor article, we traced it back to its primary source or left it out. We also interviewed a certified financial planner and a lending executive for this guide.
Federal Reserve G.19 Consumer Credit release (average personal loan and credit card APR)
Federal Reserve Bank of New York (household delinquency data)
CFPB (federal authorization of AnnualCreditReport.com as the official source)
Experian (how long hard inquiries stay on your credit report)
Maya Dollarhide is a Journalist for bestmoney.com, specializing in personal finance and consumer lending. She earned her MS in Journalism from Columbia University and has written for TIME, Yahoo Finance, Investopedia, Bankrate, Forbes, CNN, and AARP. Her work focuses on creating SEO-driven content, developing K-12 financial literacy curriculum, and producing B2B content for financial services clients.
