How to Get a Personal Loan for Debt Consolidation

A personal loan is one option for debt consolidation. It can help you save money on interest and simplify the debt payoff process because you'll only have to pay one lender each month.

Although many avenues exist for getting a personal loan, take the time to research the best option for your situation. Borrowers with higher credit scores qualify for better loan terms, and borrowers who have a less-than-stellar credit history will have to shop around to find the most favorable offer in terms of loan amounts, interest rates and fees.

MoneyLion offers a service to help you find personal loan offers. Based on the information you provide, you can get matched with offers for up to $100,000 from our top providers. You can compare rates, terms, and fees from different lenders and choose the best offer for you.

1. Check Your Credit Reports and Credit Score

Before you start looking for a loan, know your credit score. Each lender has its own credit requirements for borrowers, but all lenders will check your credit.

You should know in advance whether your credit report has any negative information. Federal law entitles you to a free copy of your credit report from each of the three main credit bureaus — Equifax, Experian and TransUnion — every 12 months, which you can order online from AnnualCreditReport.com. You can also get your credit score for free from your credit card company, bank or a free online service such as Credit Sesame or Credit Karma.

2. List Your Loan and Credit Card Balances

Include the annual percentage rates and monthly payments for each debt you owe to understand how much money you need to borrow.

3. Look for Lenders That Make Personal Loans in the Amount You Need

For example, Wells Fargo offers personal loans for debt consolidation in amounts from $3,000 to $100,000. For borrowers with good credit, the peer-to-peer lending platform Prosper offers personal loans from $2,000 to $50,000.

4. Shop Around for Lenders With the Most Favorable Interest Rates

Many lenders will share the rate you qualify for before you apply. To get your rate, you'll have to prequalify, provide personal information and wait for the lender to do a soft pull on your credit.

Make sure that when you're shopping for rates you're only authorizing soft pulls. Too many hard pulls can hurt your credit and potentially jeopardize the terms

5. Use a Debt Consolidation Calculator

Enter the debts you want to consolidate into an online debt consolidation calculator to see how a personal loan can benefit you. Although having a single monthly payment will save you time, it's also important to find a loan with the best rates and terms.

6. Apply for the Best Loan for Your Situation

Once you've shopped around and decided on a loan, apply for it and use the funds to pay off your existing debts.

7. Don't Rack Up Additional Debt

After you've paid off your debts, it might be tempting to use some of your newly available credit to make purchases.

Instead, only charge what you know you can pay for, and don't carry a balance from month to month.

8. Keep Your Old Accounts Open

If possible, try to keep your old account open. Part of your credit score depends on the length of your credit history, so the longer you've had an account, the better it can be for your credit score.

However, if the temptation is too much, it's better to shorten your credit history then have debt.

Make Sure Your Loan Is Saving You Money On Interest

Whether you need a personal loan for credit card debt consolidation or to pay off a mix of loans and credit cards, shop around for the best personal loan rates you qualify for.

And remember — just because you consolidate your debt doesn't mean you'll pay less in the long run. Although the loan might reduce your payment, a longer term can mean you'll pay more interest over the life of the loan.

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