What credit score do I need to consolidate debt?

Approvals start in the low 600s, but rates that actually beat card APRs usually require good credit (670+). Below that, a balance transfer card or a nonprofit debt-management plan may work better.

What happens if I miss a payment on the new consolidation loan?

Like any installment loan, a missed payment typically triggers a late fee, is reported to credit bureaus after 30 days past due, and can raise your rate on some loans with a default-rate clause. Missing payments on the new loan defeats the purpose of consolidating, since it damages credit while the old debts stay effectively replaced by a worse one.

Debt Consolidation Calculator

Q: Does debt consolidation save money?

Only when the new loan's rate is meaningfully lower than the weighted average rate of your current debts and the origination fee doesn't eat the savings. Consolidating 22% card debt into a 12% personal loan usually saves; consolidating into a similar rate mostly just simplifies payments.

Q: Does consolidation hurt my credit score?

Expect a small temporary dip from the hard inquiry and new account. Over time, scores often improve: card utilization drops to zero and on-time installment payments build history. The danger is running the cards back up afterward.

Q: Is a balance transfer card better than a consolidation loan?

A 0% APR balance transfer card can beat a consolidation loan if you can pay off the balance before the promotional period ends, since it charges no interest at all during that window (minus a one-time transfer fee, typically 3%-5%). It's riskier for larger balances that won't be paid off before the promo rate expires and reverts to a high standard APR.

Would rolling your debts into one loan actually save money? Compare total interest both ways — with the consolidation loan's fee included.

Written by the Calculator Index team · Last reviewed September 2026

Current debt	Balance	APR %	Monthly payment
Debt 1
Debt 2
Debt 3
Debt 4

Consolidation loan rate

%/yr

Consolidation loan term

Origination fee

Rolled into the new loan

Each current payment must exceed that debt's monthly interest.

Verdict

—

New single payment

—

Current payments total

—

Interest — keep as-is

—

Interest + fee — consolidated

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Debt-free (as-is)

—

Debt-free (consolidated)

—

When consolidation wins — and when it doesn't

Consolidation saves when: new APR + amortized fee < weighted average APR of current debts

The comparison is honest only if it includes the fee and holds the timeline steady. A lower payment is easy to manufacture with a longer term — that's not savings, that's stretching. This calculator compares total dollars, not just monthly cash flow.

Worked example (defaults above)

$10,500 of card debt averaging ~22.6% APR, paid at $325/mo → about $4,700 interest, debt-free in ~4 years.

Consolidated at 12% over 3 years (3% fee rolled in): payment $359/mo, total cost about $2,400 — roughly $2,300 saved and a year sooner.

Worked example — when consolidation loses money

Same $10,500 balance, but this time the offer is a 3-year loan at 16% APR with a 5% origination fee (a realistic offer for a borrower with fair, not good, credit).

Principal rolled in: 10,500 × 1.05 = $11,025. Payment at 16%/3 yrs ≈ $387/mo; total cost over the term ≈ $13,932 − $10,500 = ≈ $3,432. That's roughly $1,270 more than the ≈ $2,163 in interest the same borrower would have paid keeping the original cards (at their $325/mo pace, closer to 4 years — the fee plus the still-fairly-high 16% rate erase the benefit entirely). The lesson: a consolidation offer only helps if the rate is meaningfully below your blended card rate, not merely different from it.

The consolidation trap to avoid

Consolidation moves debt; it doesn't erase the habits that created it. The most common failure mode: consolidate the cards, feel relief, then run the newly-empty cards back up — ending with the loan and new card debt. If you consolidate, freeze or close the paid-off cards until the loan is gone, and consider building a small emergency buffer first so surprises don't land on the cards. Compare alternatives: a 0% balance transfer (see credit card payoff), a home equity loan if you own (cheaper, riskier), or simply the avalanche method with no new loan at all.

Consolidation loan vs. other options

Option	Typical rate	Best for
0% balance transfer card	0% for 12–21 mo, then 18%+	Balances payable within the promo window
Personal consolidation loan	8%–20%+ (credit-dependent)	Fixed payoff date, meaningfully lower than card APRs
Home equity loan/HELOC	7%–11%	Homeowners with equity, comfortable using the house as collateral
Nonprofit debt management plan	Often reduced by the plan	Credit below ~600 or too much debt to qualify for a loan
No new loan (avalanche/snowball)	Existing card rates	Anyone who wants zero risk of new-account fees or a hard inquiry

Common debt consolidation mistakes

Comparing the new monthly payment instead of total interest. A longer term can lower the payment while actually costing more overall — as shown in the losing-money example above.
Ignoring the origination fee when comparing rates. A 16% loan with a 5% fee rolled into the principal effectively costs more than its stated APR suggests in the first year.
Running the paid-off cards back up. The single most common way consolidation backfires — see the trap discussed above.

Frequently asked questions

Does debt consolidation save money?

Only when the new rate (plus fee) is meaningfully below your weighted average current rate — like 22% cards into a 12% loan.

Does consolidation hurt my credit score?

Small temporary dip; often improves later as utilization drops — unless the cards get run back up.

What credit score do I need?

Approvals from ~600s, but rates that beat card APRs usually need 670+.

Is a balance transfer card better than a consolidation loan?

A 0% promo card can beat a loan if you'll pay it off before the promo ends; riskier for balances that will still be around when the rate reverts to 18%+.

What happens if I miss a payment on the new loan?

Late fees and a credit-bureau report after 30 days, same as any installment loan — which defeats the purpose of consolidating in the first place.

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Note: Simulation assumes fixed payments and monthly compounding. Actual loan offers vary by credit profile. Not financial advice. Last reviewed: September 2026.