Enlisting the help of the best debt consolidation companies could prove life-changing if debt is starting to get the better of you. By bringing all your debt together into one loan, a debt consolidation company aims to leave you with a single - and hopefully more affordable - monthly payment to meet. The best debt consolidation services are usually willing to combine all your current credit card, store card and personal loan debt in this way.
If you’re looking to consolidate your debt, note that effective solutions can typically be found through traditional lenders, via a personal loan, as well as through specialist debt consolidation companies. Your search will also likely bring to light the services of debt settlement companies. The main distinction here is that debt settlement services look to reduce your debt by negotiating with your creditors, reasoning that they are better to receive a lower amount of money than nothing. However, in charging extremely high fees, and having a crippling effect on your credit score, debt settlement should always be seen as an option of near last resort - our debt consolidation vs debt settlement guide explains more.
National Debt Relief is our top debt consolidation choice. Offering straightforward solutions and excellent customer service, its average rate of debt reduction is among the best we've found.VIEW DEAL ON National Debt Relief
Your credit score will be taken into account when debt consolidation companies assess your eligibility for a loan and decide the terms that they are willing to offer. How much you earn, your outgoings, and your employment status will also be considered when determining the finer details of your loan. If you have a low credit score, you are likely to be charged a higher interest rate (or APR) and could even be rejected for a debt consolidation loan altogether. If this proves the case, it might be worth approaching the best credit repair services to see if they can help restore your credit to better health.
In appreciation that people will come to debt consolidation in different circumstances and with different needs, our rundown of the best debt consolidation companies includes selections across a number of areas that we consider important. There is a top choice for those with a good credit score and another for those with bad credit; we also highlight the best debt consolidation companies if you want flexible terms, only have credit card debt, or feel you could benefit from in-depth education on the subject of debt. Whatever your current situation, the final goal has to be a future free of debt, and the best debt consolidation companies are best-placed to help you achieve this.
1. National Debt Relief: Best debt consolidation company overall
National Debt Relief has been offering debt relief since 2008, establishing itself as our favored debt settlement company in that time. Recently, however, it has started offering debt consolidation, offering a simple and straightforward service that is ideally suited to those with smaller debts that they want to clear for good. Introduced in 2019, the debt consolidation service is relatively new, but there is already much in its favor.
Loan amounts can range from $2,000 to $35,000, payments can be made over a term of between 24 and 60 months, and the pre-qualification process for your debt consolidation loan won’t affect your credit score either. On the downside, the website is not as straightforward as some, but as a new proposition, it must be hoped that this issue will be remedied soon, particularly as the debt consolidation loans and the service on offer from National Debt Relief are both great.
2. Discover: Best debt consolidation company for service
Discover provides an easy to use and well-considered debt consolidation solution, but it is an outstanding commitment to customer support that sees it rank as the best debt consolidation company for service overall.
The application process is straightforward, your account can be managed online and over the phone, charges are kept to a minimum, and you can check on the rate that Discover will offer you without affecting your credit score. As already mentioned, the supporting resources are excellent too, and in the 30-day money-back guarantee, you have the option to cancel your loan if you find a cheaper rate elsewhere. There's also an option to have Discover manage the payments that must be made to your creditors, which should lower stress levels.
If you have larger debts, the maximum loan amount of $35,000 might not suffice, while a decent credit score is required to secure a low rate. However, if what you want is a straightforward debt consolidation service, and a lender who appears to have your interests at heart, Discover should definitely be one of your first picks.
- Read our Discover Debt Consolidation review
3. Marcus by Goldman Sachs: Best debt consolidation company for those with good credit
Marcus by Goldman Sachs should be one of the first debt consolidation companies on the list of those possessing a decent credit score. However, Marcus has so much more to offer too, including an eligibility checker, a smooth application process, and the absence of any fees.
There are some useful stress-relieving and time-saving features on offer as well, such as the free Direct Payment option that means funds will be sent directly to up to 10 credit card companies, so you don't have to. While everything can be managed online, there is the option to call for help if you so wish, and with the FAQs a little hidden away, you might need that additional support.
If you have debts in excess of $40,000, you'll also need to look elsewhere, but fit in with the criteria that Marcus caters to - and in particular, if you have a better than average credit score - then a good all-round debt consolidation experience should await.
- Read our Marcus by Goldman Sachs review
4. InCharge: Best debt consolidation company for financial education
InCharge is so much more than your typical debt consolidation company, and what really stands out is the effort that it puts in to make sure those that extricate themselves from debt do not quickly find themselves back in it. A credit counseling service and a whole host of educational initiatives are on offer at InCharge with the aim of getting people to manage their debt more responsibly.
The debt consolidation proposition is slightly different from the norm too. By enrolling in the debt consolidation program, you agree to make one monthly payment to InCharge, which is distributed to creditors, but a new loan is not taken out. Instead, the counselors work with credit card companies to try and negotiate lower interest rates. The aim is to get people debt free within three to five years, and the absence of any credit score requirements (because you are not taking out a loan) means it is an option that is open to all as well.
While InCharge is a non-profit organization, the service attracts a setup fee and a monthly charge, which should be weighed up against the potential interest savings that you might make. However, if the sums add up, and you want a supportive and informative path to better managing your debt, InCharge is the option you should seek.
- Read our InCharge review
5. Prosper: Best debt consolidation company for those with bad credit
Prosper was a pioneer in the peer-to-peer sector and is now a solid performer as a debt consolidation company. At the core of Prosper's approach is an accessible online platform and a willingness to be upfront with borrowers over how they can qualify for a debt consolidation loan and what it will cost.
In that regard, you will likely need a decent credit score to get a good rate, but there is a handy eligibility checker to find out whether you are likely to succeed - and on what terms - that doesn't impact your credit rating. It is admirable that Prosper are open about their fees too, as cheaper loan options are likely to be available elsewhere, particularly if you are prone to missing a payment.
The peer-to-peer aspect means there could be a longer than average wait for the loan funds to arrive in your account too, but then it is an approach that can provide the opportunity of lower rates as well. That joint applications are allowed will also be a welcome option for some, but it is the transparency that Prosper offers that makes it a debt consolidation company that should not be ignored.
- Read our Prosper review
6. Avant: Best debt consolidation company for overpayments
Avant ranks among the best debt consolidation companies mainly due to a willingness to listen to those with below par credit scores and the fee-free ability to pay your loan off early. On top this, Avant offers an extremely accessible online platform, the option to check your loan eligibility without affecting your credit score, and the potential for funds to be in your account the day after your loan is approved.
Perhaps unsurprisingly, given Avant will consider poorer credit scores, the lowest APR on offer of 9.95% is higher than the cheapest options available elsewhere. In addition, there is an administration fee that could be as high as 4.75% to be factored into any calculations too.
That said, if you want a reliable online debt consolidation loan, need your funds fast, and have perhaps had little luck when applying elsewhere, Avant still offers plenty that will please.
- Read our Avant review
7. LightStream: Best debt consolidation company for flexible terms
LightStream will be a great choice if you're happy online and want the maximum amount of flexibility in respect of your debt consolidation loan options. In welcoming those with debts of up to $100,000, and offering payment terms of up to seven years, the needs of all borrowers should be met.
As everything must be completed online, it is good to know that the application process is quick and easy - for those not so comfortable on screen, be aware that there is no phone to ring. The relatively high credit score requirements for a LightStream loan might also be exclude some, while the absence of a soft pull credit inquiry before you apply is unusual for an online lender too.
However, there are no fees, the chance of receiving your funds on the same day that you apply, and there is a rate guarantee too, where LightStream promises to beat a rate offered by a rival under the same terms by 0.1%. Add in the widest possible loan terms that you can get, and LightStream offers an excellent debt consolidation option.
- Read our Lightstream review
8. Wells Fargo: Best debt consolidation company for high amounts of debt
Wells Fargo is the well-known bank that should have a debt consolidation solution for most. Few lenders can match the $100,000 loans that it offers, while payment terms can stretch over as long as seven years. There is also an option for joint applications, rate discounts for those who are already customers of the bank, and no fees.
While new customers will need to take a trip to a Wells Fargo branch to get started, the chance of a face-to-face consultation and advice is sure to appeal to many who prefer a more personal experience when it comes to their finances than is usually available through online-only lenders. That said, Wells Fargo still has an impressive online offering up its sleeve too, allowing customers to manage their accounts without leaving home and providing a wide range of guidance and support via articles, videos and calculators. There's an option that will see Wells Fargo pay your creditors direct too.
The need to actually apply for a loan in order to find out whether you will actually qualify for one could put some people off, but all-in-all, Wells Fargo offers a compelling debt consolidation solution from one of the most experienced banking names.
- Read our Wells Fargo review
9. Lending Club: Best debt consolidation company for online applications
LendingClub is a peer-to-peer lender that wants to deliver creative credit solutions, and with its debt consolidation approach, it tends to deliver.
A commitment to make the process of applying for a debt consolidation loan as straightforward and stress-free as possible is certainly met. It is possible to complete everything swiftly online, or you can phone if you prefer a friendly voice. Managing your account from there on in is simple too, while there is heaps of information available across the website, both in terms of the loan itself and wider guidance on debt and finance.
Relatively stringent lending criteria might mean some people struggle to secure a loan with LendingClub, although this is countered by the ability to make joint applications, an option that could improve your chances or lead to a better rate. If you have larger debts or want a number of loan terms from which to choose, LendingClub might disappoint, while there is an origination fee to take into account, and a longer than usual turnaround time for funds too.
That said, if you possess a decent credit score, and want a slick online debt consolidation solution, LendingClub could still appeal.
- Read our LendingClub review
10. Payoff: Best debt consolidation company for credit card debt
Payoff is the debt consolidation company that seems to have your best interests at heart. Focusing purely on credit card debt, Payoff wants to help people get their finances back on track, and then make sure they don't veer off the road again. Psychologists and scientists are both on Payoff's payroll as part of the effort to promote healthier financial habits among its customers.
As to the actual consolidation of debt itself, the application process is straightforward and there's a soft inquiry 'Check my rate' option to ascertain your eligibility before you apply proper. Unsurprisingly, there is support readily at hand both online and over the phone should it be required.
The origination fee, which could be as high as 5%, might deter some, and higher loan amounts and swifter turnaround times are probably available elsewhere, but Payoff is transparent in everything that it does. For some people, they might also be willing to pay slightly over the odds or wait a little longer for their funds simply to try and gain from the extra support that Payoff has to offer. Welcome calls and regular check-ins are all part of a debt consolidation service that takes a proactive approach to helping its customers.
- Read our Payoff review
National Debt Relief is our top pick
We recommend giving National Debt Relief a call if you're worried about debt. Customer service and debt negotiation are provided in-house, and its average rate of debt reduction is the highest we've found.
Debt consolidation loans: What are the risks?
While most debt consolidation companies offer unsecured loans, which don't require any collateral in order to apply, some also offer secured loans, against which you will need to promise something to the lender - usually your home - as security. This is incredibly risky because if you cannot meet your payments, your home is on the line. Furthermore, if you have bad credit, debt consolidation loans may come with high interest rates.
In addition to putting your home at risk, it is possible that a debt consolidation loan will end up prolonging someone's debt. While having one low rate and one payment is an attractive option, it has to be done right and payments need to be kept up to date to avoid slipping into a similar, or even worse, financial situation in the future.
Best debt consolidation companies: What to look for
When choosing from the best debt consolidation companies, it is important to find a lender that’s reliable and compliant with FTC regulations. Avoid going with a company that fails to disclose all the legally required information before encouraging you to enroll.
Accreditations are another key indicator of whether a company adheres to ethical standards. The accreditations listed below are through private agencies, not the government. However, these entities are recognized as authorities in the industry and have missions to promote ethical debt management practices.
The American Fair Credit Council (AFCC), formerly known as the TASC, advocates for consumers. To be AFCC accredited, a company must be fully compliant with FTC regulations and undergo an annual renewal process.
The International Association of Professional Debt Arbitrators (IAPDA) offers certifications and exercises for debt specialists. The employees at companies that are IAPDA certified have been professionally trained in debt management best practices and upholding ethical standards.
The United States Organizations for Bankruptcy Alternatives (USOBA) has rigorous standards that go beyond FTC regulations, and debt consolidation companies must adhere to them to be certified.
Lastly, look closely at the supplemental resources a company offers. While any company can provide negotiation or consolidation services, the best ones provide solutions for managing your finances and staying out of debt. Any company that appears to be looking for repeat customers should be avoided.
Debt consolidation and transparency
How forthcoming a lender is with information should be a huge factor when choosing a debt consolidation company. Before you sign anything, make sure you understand the company’s history. Due to the New Rule, there are things a company legally must disclose before you enroll in its program. These include educated estimates of the potential length of your program, the cost of your program, your rights as a consumer, and the fact that you are still responsible for your debts and may receive collection calls.
Companies legally cannot charge upfront fees for services and must provide an upfront estimate of how long your program will take. Also, they should never put pressure on you to disclose personal information, such as your bank information, before you enroll in their program.
Finally, debt consolidation companies cannot promise to stop collection calls. Collection agencies are within their legal rights to contact you. While your debt consolidation company may attempt to reduce the number of calls you receive, they might not stop, especially if you stop making your payments to your creditors as part of the program.
What is credit counseling & how can it help?
Depending on the amount or type of debt you have, you might be referred to a credit counselor. Most of the debt consolidation companies we reviewed refer you to a credit counseling firm if you have around $7,500 or less in unsecured debt, such as credit cards and personal loans.
Credit counseling usually entails two things. The first is a call with a certified counselor. During this call, you go over your expenses, income and savings, and they help you create a budget. They can also point you to resources for getting credit reports. Credit counselors can also recommend ways to manage your debt – for example through bankruptcy, debt settlement or debt management plans managed by the credit counseling agency.
If credit counseling sounds like something that could help you, check out the National Foundation for Credit Counseling’s list of accredited organizations.
Can you consolidate medical debt?
With medical costs rising, more and more Americans are incurring debt to pay their bills. The average household spends more than $4,600 a year on medical care. According to the CFPB, one in five credit reports has a late medical bill that has been sent to collections. Like all debt, medical debt can be consolidated in a variety of ways.
One way to consolidate or eliminate your medical debt is to negotiate with your creditor. Medical bills often contain errors, so when you get one, review it to make sure it's accurate. If something is wrong, contact your insurance company and the provider’s billing department to get it corrected. You can also apply for financial hardship, especially at a hospital, which can help reduce the amount you pay.
Common ways of consolidating consumer debt also apply to medical debt. You can get a 0% balance transfer card, a personal loan or a home equity loan. All of these depend in part on you having good credit, which may not be the case if you’ve missed any payments on your medical debt. However, if you’re still making payments and have good credit but want some flexibility and relief, these may be good options.
Working with a debt settlement company is another option. You’ll stop making payments on your bill and instead put the money into a fund the settlement company will use to negotiate with your creditors. This option can damage your credit since you don’t make payments while the negotiations proceed.
Are balance transfer cards a good option?
If you’ve got multiple credit cards, personal loans or student loans and worry about struggling with the payments, consolidating the balances onto a single card may be a good option to help you better manage those payments.
With a balance transfer card, you’ll move your existing balances onto just one card. This doesn’t pay them off, it just moves them to one card with one interest rate. Typically these cards offer introductory APRs of 0% for several months; this is a good way to get a leg up on your payments and avoid getting hit with additional interest.
When looking for a good balance transfer card, keep your eyes out for a few things. First, there may be a fee to transfer your balance. This can be between 3% and 5% of your existing balance. So if you transfer $10,000, you’ll pay between $300 and $500. This is less than the fee you’d pay with a debt settlement company, who typically charge between 15% and 25% on debt they settle. Some balance transfer cards don’t have transfer fees, so keep an eye out for those.
Another thing to keep in mind is that some cards will only let you transfer a certain percentage of that card’s credit limit. You’ll also need to factor fees into that amount. So if you have a balance transfer card with a limit of $10,000, but you are only allowed to transfer 75% of the limit, you’ll only be able to transfer $7,500. And that could leave you with a remaining balance on one of your other accounts.
Typically, you’ll need a high credit score to be eligible for a balance transfer card. Applying for one will result in a hard inquiry, which will affect your score. Generally, if you’ve fallen behind on your current payments, you may need to look for other avenues for debt reduction, since you’ll likely not be eligible for a balance transfer card.
Student loan consolidation
Student loans are one of the most common types of debt in the U.S., making up $1.5 trillion of the population’s debt load. The average student owes around $37,000, and average monthly payments are around $330. Though the federal government is the biggest lender, private lenders account for around 20 percent of the total student loan volume. If student loan debt becomes hard to manage, refinancing and consolidation are two ways to make payments more manageable.
How you consolidate your debt depends on if you have federal loans, private loans or a combination of both. If you only have federal loans, you can apply for consolidation through the Department of Education. Consolidating your federal student loans is similar to consolidating other loans. You won’t get a lower rate, though you can convert variable rate loans to a fixed rate. The primary benefit of consolidating your federal loans is they are combined into a single package and you have just one monthly payment. You can also get a new term, often up to 30 years. The rate for your consolidated loan is the average of your loans’ current rates, rounded to the nearest eighth of a percent.
If you have private loans or a combination of private and federal loans, you can apply to consolidate them through another lender. There are stricter application requirements. For example, you need to have a source of income and good credit – if not, you may need to find a co-signer. When you consolidate your loans through a private lender, you can typically get a lower rate and longer term.
However, private consolidation has some drawbacks. Because it has more requirements, especially regarding your credit, it can be difficult to get approved. And if you are approved, you may not get the best rate. Terms are also shorter, typically 20 years as opposed to 30 years for a federal consolidation. In addition, you waive some fringe benefits – for example, forbearance in case you lose your job.
Can you use your home’s equity to consolidate debt?
If you’ve owned your home for a while and have built up substantial equity, you may be able to tap into that equity as a way to consolidate the medical and credit card debt you’re struggling with. Getting a home equity loan has some advantages over other methods of debt consolidation.
With a home equity loan, you tap into the equity you’ve built up over the years of paying off your mortgage. Home equity loans typically have much lower rates than debt consolidation loans or balance transfer credit cards. The average rate as of February 2018 is around 5.95%, while the best rate for a debt consolidation loan starts at around 13%. And even if you don’t qualify for the best rates, by combining multiple interest-charging accounts into one loan, you’ll still save money.
Another advantage of a home equity loan is lenders typically have less strenuous credit requirements for approval. With a debt consolidation loan, you need a score of around 720 to get a good rate, and a score lower than 680 makes approval unlikely. You can get a home equity loan with a score of around 620, and your credit score contributes less to the decision than for other loans. Lenders also look at your debt-to-income ratio and other aspects of your financial history.
However, there are some disadvantages of getting a home equity loan and using it for debt consolidation. For example, the process for getting one can be time consuming – you need to get an appraisal and go through an underwriting process similar to the one for your first mortgage. This can take upward of a month in some cases. Typically, a debt consolidation or personal loan has a shorter approval process.