Best debt consolidation loans of July 2025

How to get a debt consolidation loan with NerdWallet

1. Check your credit score before applying Before applying for a debt consolidation loan, it’s important to check your credit score. You can do this for free at AnnualCreditReport.com. This will give you an idea of where you stand in terms of the credit brackets — excellent, good, fair or bad — and which lenders may be the best fit based on their minimum credit score requirements. You can also take steps to quickly boost your credit. Checking your credit report for errors (more common than you think) or paying down a small debt before you apply for a loan can make it easier to qualify.
2. Pre-qualify and compare multiple loan offers Once you know your credit score, it’s time to compare loan offers. The best way to do this is by pre-qualifying, which includes filling out a short, online application with a lender and viewing your potential loan terms and APR, without any effect on your credit score. Though not all banks or credit unions offer pre-qualification, most online lenders do. Try to pre-qualify with multiple lenders, so you know you’re getting the lowest rate possible.
3. Submit your application Once you’ve decided on a lender, it’s time to apply for the loan. Most loan applications are online and ask you to supply personal information like your Social Security number, address and other contact details. You also may be asked to provide proof of identity, employment and income. Once you’ve submitted your application, the lender will make an approval decision. If you’re approved, you’ll sign the loan agreement and receive the funds. Funding time varies among lenders, but some lenders can fund the same day you’re approved.
4. Pay off your creditors Here’s the most important step: Use the loan proceeds to pay off your existing debts. Some lenders send the funds to your creditors for you, so you’ll need to provide account information about your existing debts — and check the accounts to make sure they’re paid off. If a lender doesn’t offer direct payment, they’ll deposit the funds in an account of your choosing or mail a check, if you prefer. It’ll be up to you to make sure the right amount goes to each debt.
5. Start making payments on your new loan Once your existing debts are paid, you’re left with your new loan. Personal loan payments are monthly, though there’s usually no fee for paying off a loan early. Make a plan now to manage your personal loan payments. As you make progress on paying off your loan, try to keep your credit card balances at or near zero until you’re debt-free. But avoid closing the accounts, which can lower your credit score. You’ll also want to focus on staying debt-free in the long-run. This can look different for everyone, but creating a monthly budget and building an emergency fund are two key universal steps that will keep you out of debt in the future.

How to choose the best loan for you

• Does the lender’s loan amounts and terms match your debt? Personal loans for debt consolidation come in a wide range of loan amounts ($1,000 to $50,000) and repayment terms (two to seven years). Make sure the lender offers the loan amount you need and enough time to pay it off.
• Does the lender offer an annual percentage rate lower than your existing debts? The loan's annual percentage rate, or APR, represents its true annual cost and includes interest and any fees. The most affordable loan is the one with the lowest APR.
• Do you meet the lender’s qualification criteria? Some lenders openly disclose their borrower requirements, including minimum credit score, credit history and income. You can check the lender’s website for this information or call and ask to speak to a loan officer.
• Does this lender charge an origination fee? This one-time fee may range from 1% to 10% of the loan amount and is deducted from the loan proceeds or added to the loan balance. To keep costs down, avoid loans with this fee — unless the APR (which includes the origination fee) is still lower than loans with no origination fee.
• Does this lender offer special debt consolidation features? Some lenders offer extra perks, like sending the loan funds directly to your creditors or free credit score monitoring. Consider these features, but always prioritize an affordable loan you can repay on-time.