Struggling with multiple debts and a low credit score can feel overwhelming. If you’re juggling credit cards, personal loans, or medical bills, a debt consolidation loan can help simplify your finances—turning multiple payments into one and possibly reducing your interest rate. But what if your credit isn’t in great shape?

The good news is that debt consolidation loans for people with bad credit do exist. They may come with higher interest rates, but with the right lender and strategy, they can still be a smart step toward financial recovery. Here’s what you need to know—and where to look—for the best debt consolidation loans if you have bad credit.

What Is a Debt Consolidation Loan?

A debt consolidation loan is a personal loan used to pay off multiple existing debts. Once approved, you use the funds to pay off credit cards or other unsecured loans. Then, you make one monthly payment on the consolidation loan—ideally at a lower interest rate or with better terms.

Why Bad Credit Makes It Harder—but Not Impossible

Lenders use your credit score to determine how risky it is to lend to you. If your score is under 580 (considered poor by FICO standards), you may face:

    • Higher interest rates
    • Stricter loan terms
    • Lower approval odds

    However, some lenders specialize in loans for borrowers with less-than-perfect credit. These lenders look beyond your score and consider your income, employment history, and ability to repay.

    Top Loan Options for Debt Consolidation with Bad Credit

    1. Bajaj Finserv

      • Loan Type: Personal loan
      • Interest Rate: Starting from 11% (varies)
      • Features: Fast approval, flexible tenure up to 60 months, and pre-approved offers for existing customers. May consider applicants with lower scores if income is stable.

      2. PaySense

        • Loan Type: Instant personal loan
        • Interest Rate: 16%–36%
        • Features: Minimum CIBIL score of 580. User-friendly app interface and approval within 48 hours. Works well for salaried professionals.

        3. Fullerton India

          • Loan Type: Personal loan
          • Interest Rate: Starting from 11.99%
          • Features: Tailored products for low-credit borrowers, especially if you have regular income or existing relationship with the lender.

          4. LoanTap

            • Loan Type: Flexible personal loans
            • Interest Rate: 18%+
            • Features: Offers personal loans with flexible repayment options, including interest-only EMIs for the first few months.

            5. Secured Loans from Banks or NBFCs

              • Examples: SBI, HDFC, ICICI
              • Loan Type: Against fixed deposit, gold, or property
              • Why It Helps: These loans are backed by collateral, so even with poor credit, you stand a better chance of approval and lower interest rates.

              Tips to Improve Your Loan Approval Odds

                • Check and fix errors in your credit report from CIBIL or Experian
                • Consolidate smaller debts first if you're denied a larger loan
                • Add a guarantor or co-applicant with a good credit score
                • Avoid applying with too many lenders at once, as this lowers your score further
                • Improve income proof, including salary slips or business turnover

                Final Thoughts

                Having bad credit doesn’t mean you’re out of options. Several lenders in India cater to borrowers with less-than-perfect credit—especially if you show the ability to repay. A debt consolidation loan, used wisely, can help you regain control, reduce stress, and even rebuild your credit over time.