If you’re struggling with multiple debts and your credit score has taken a hit from missed payments, you may be looking into consolidating your debts. Debt consolidation loans for bad credit do exist, but because of your low credit score, you may not get a lower rate than what you’re currently paying. However, lenders might be willing to offer you a longer loan term. This means you’ll have a lower, more manageable monthly payment, but you’ll pay more interest overall.
In this guide, we cover where you can apply for the best debt consolidation loans in Canada with bad credit and what to consider before getting one.
Loans Canada is an online loan search platform partnered with 60+ lenders, including those that offer debt consolidation loans for bad credit. Fill out one application and get your matches for free.
Why it's one of the best
Search a large lender network. Loans Canada works with 60+ lenders to help you find a loan you can use for debt consolidation.
Get approved. Only see lenders that match your profile.
Work with an established company. Loans Canada has been in business since 2012. It has BBB accreditation with an A+ rating.
Easy online application
Quick deposits
High loan amounts
No collateral required to secure your bad credit loan
High rates for bad credit
No online quotes provided
Limited to its network
Loan Amount
$500 – $50,000
APR Range
8.99% – 35%
Loan Term
4 - 60 months
Serviced Provinces/Territories
All of Canada
Turnaround Time
Receive funds in as little as 24 hours.
Min. Credit Score
300
Fees
No application, origination or brokerage fees
Requirements
Canadian resident, age of majority in your province of residence
LoanConnect maintains a large database of lenders and matches you with one or more consolidation loan offers based on your unique profile.
Why it's one of the best
Save time. Your application will be cast wide and you'll get your results right after you apply.
Easily compare offers. Compare offers from multiple lenders and log in regularly to see if new offers are available.
Choose between secured and unsecured loans. Find a secured bad credit debt consolidation loan if you have an eligible asset or get a loan with no collateral.
Pre-approval in five minutes
Many bad credit loan options
BBB-accredited with an A+ rating
Fast funding
Not a direct lender
High rates for bad credit
Miss out on offers from lenders not partnered with LoanConnect
Loan Amount
$500 – $60,000
APR Range
8.99% – 35%
Loan Term
3 - 120 months
Serviced Provinces/Territories
All provinces
Turnaround Time
Receive funds in as little as 24 hours.
Min. Credit Score
300
Fees
No application, origination or brokerage fees
Requirements
Canadian citizen or permanent resident, age of majority in your province of residence, current debts must total less than 60% of your income
Spring Financial offers fast approval and funding. If you don't qualify for a bad credit debt consolidation loan, however, it'll offer you its credit builder loan, The Foundation. With this product, you won't access the $1,500 loan funds until after you've made all your payments over 12 months, with interest.
Why it's one of the best
Get a debt consolidation loan from an established lender. Spring Financial has been providing bad credit loans in Canada since 2015 and has over employees with headquarters in Vancouver, BC.
Improve your credit score. Spring Financial reports payments to the credit bureaus so you can increase your credit score.
Get quick funding. If you provide the required documents on time, you can get your bad credit loan the same day you apply.
100% online
Fast funding via e-Transfer
No prepayment penalties
High rates for bad credit
D BBB rating, received complaints about the credit builder loan
Loan Amount
$500 – $35,000
APR Range
9.99% – 35%
Loan Term
6 - 84 months
Serviced Provinces/Territories
All of Canada
Turnaround Time
Within 24 hours
Min. Credit Score
550
Fees
No fees except $30 NSF fee
Requirements
Min. income of $2,000, min. credit score of 550, 3+ months employed
easyfinancial helps Canadians access financing when banks aren't an option. It offers debt consolidation loans for bad credit across Canada online and in hundreds of locations.
Why it's one of the best
Get a quick quote. Apply in minutes with no commitment and it won't affect your credit score.
Work with a well-known lender. easyfinancial is one of the biggest lenders of bad credit personal loans in Canada.
Improve your credit score. According to easyfinancial, one in three customers graduate to prime rates after making regular, on-time repayments.
Secured and unsecured bad credit debt consolidaiton loans
2% rate reduction with a co-applicant
BBB-accredited with an A+ rating
Steep rates for bad credit
Many negative customer reviews
Loan Amount
$500 – $150,000
APR Range
9.99% – 35%
Loan Term
9 - 240 months
Serviced Provinces/Territories
All provinces
Turnaround Time
Approval within 30 minutes
Min. Credit Score
300
Fees
you may come across non-sufficient funds fees, late payment fees, missed payment fees or admin fees
Requirements
Be a Canadian citizen. Meet the minimum age requirement, which varies from province to province. Be able to demonstrate an ability to make repayments. Min. monthly income of $1,200.
Blue Copper Capital opened in 2006 and operates in Alberta and British Columbia with physical branches in Calgary and Edmonton. It offers payday loans, personal loans, lines of credit and business loans. You can apply for a personal loan or line of credit to consolidate your debt.
Why it's one of the best
Quick approval. You can get approved for a loan within 20 minutes.
In-branch service. Choose between applying for your debt consolidation loan online or in person if you live in Calgary or Edmonton.
Accepts bad credit. Blue Copper Capital states it doesn't automatically reject loan applications based on poor credit alone.
Reports payments to credit bureaus so you can improve your credit score
Approval within 20 minutes
Multiple loan options
Only accepts employment income
Limited to BC and AB residents
Loan Amount
$1,000 – $100,000
APR Range
16% – 35%
Loan Term
6 - 84 months
Serviced Provinces/Territories
BC and AB
Turnaround Time
Varies
Fees
$6 per month
Requirements
3+ months employed, active bank account, resident of AB or BC, at least 18 years of age
Fairstone provides both secured and unsecured personal loans you can use to consolidate your debt. With more than 250 branches across Canada and a legacy dating back to 1923, it's a well-established alternative lender that can offer funds in as little as 24 hours.
Why it's one of the best
Flexible loan amounts and terms. Borrow up to $60,000 for 36–120 months with a secured personal loan or up to $25,000 for 6–60 months with an unsecured personal loan.
Debt-consolidation friendly. Fairstone explicitly states you can use their personal loans to consolidate multiple bills into one payment.
Talk to a lending specialist. When you apply for a personal loan, a lending specialist will contact you about your loan and help you find a manageable payment schedule.
LM Credit specializes in unsecured personal loans up to $15,000, which you can use to consolidate debt or rebuild your credit. Its head office is in Mississauga, Ontario, but it offers loans Canada-wide (except Quebec).
Why it's one of the best
Fast funding. Approval can take up to two business days, but you'll receive funding the same day you're approved.
Credit-boosting potential. LM Credit reports your payments to the credit bureaus, helping you rebuild credit if you make on-time payments.
Personalized lending. LM Credit assesses each applicant's unique situation, so it may approve you even if you don't meet all the listed eligibility criteria, like having two pay stubs as proof of income.
Cashco offers unsecured personal loans known as Flex Loans of up to $9,000 that you can use for debt consolidation, even if your credit isn't perfect. It operates both online, providing funding in up to 72 hours.
Why it's one of the best
Apply at any time. Online applications are open 24/7, so you can apply whenever it's convenient for you.
Bad credit accepted. Cashco states it doesn't rely on your credit score for approval.
Improve your credit score. Cashco reports your payments to credit bureaus, which can help you improve your credit score if you consistently pay on time.
Accepts various forms of income, including government benefits
A+ rating on BBB
Flex Loan capped at $9,000
Only available in BC, Saskatchewan and Alberta
Approval takes two to three days
Loan Amount
$500 – $9,000
APR Range
Up to 35%
Loan Term
6 - 60 months
Serviced Provinces/Territories
AB, BC, NB and SK
Turnaround Time
within 24 hours
Min. Credit Score
300
Fees
Up to 10% of your loan amount to set up your loan, NSF and late payment fees of $25.
Requirements
Must be the age of majority in your province, with an active bank account, proof of employment and proof of residency to apply.
FlexMoney is an online-only lender offering fast bad credit personal loans in Canada, which you can use to consolidate debt.
Why it's one of the best
Get an instant decision. FlexMoney's automated system enables it to give you a no-obligation quote within minutes.
Get your funds fast. Funds should reach your account on the same day or the next day.
Rebuild your credit. FlexMoney will report regular, on-time payments to the credit bureau.
Make payments weekly, bi-weekly, bi-monthly or monthly
Easily make extra payments via e-transfer
Interest rates can reach as high as 35%
Minimum income required ($2,000 per month)
Must be employed
Loan Amount
$500 – $15,000
APR Range
18.9% – 35%
Loan Term
6 - 60 months
Serviced Provinces/Territories
AB, BC, NL, NS, ON, PEI, SK and YT
Turnaround Time
Receive funds within as little as 24 hours
Min. Credit Score
500
Fees
No application, origination or prepayment fees
Requirements
- At least 20 years old - Proof of monthly income for the past 3 months - Income of at least $2,000 per month - Valid Canadian ID to confirm your identity, address and phone number - Valid email address and phone number
Money Mart offers installment loans and payday loans to people with bad credit. It's been in business for over 40 years and is one of the largest alternative lenders in Canada. You can use its installment loans to consolidate debt if you have bad credit.
Why it's one of the best
Get your loan fast. You can get a payday loan almost instantly and an installment loan in as little as 2 hours.
Apply online or in-store. Get your loan online or at one of Money Mart's 500+ store locations.
Get some leniency. Money Mart is less strict with its requirements than banks, credit unions and some alternative lenders. You can qualify with a chequing account and a regular source of income.
Established lender
Convenient mobile app
Accepts non-employment income such as government benefits and private pension
High interest rates
Availability in provinces varies in-store and online
Loan Amount
$500 – $25,000
APR Range
34.56% – 34.95%
Loan Term
6 - 84 months
Serviced Provinces/Territories
AB, BC, MB, NS, NT, ON, PEI, SK, YT
Turnaround Time
Less than 1 day
Min. Credit Score
300
Fees
None
Requirements
- Be at least 19 years of age - Have an active chequing account - Have a steady source of income
Finder experts collected 11 points of data for more than 50 lenders operating in Canada. Finder used this data to create a proprietary weighting formula that scores each lender based on rates, fees, terms, loan amounts, application process, funding speed, customer support, and reputation, among other features. The providers shown on the best list are those who scored highest based on this data-driven methodology. They are providers that are available and not available through Finder. While we aimed to review a wide range of lenders, the loans listed do not reflect the entire market. Read more about the Finder personal loan ratings and review methodology.
How do debt consolidation loans for bad credit work?
With debt consolidation loans for bad credit, you apply for a loan that you’ll use to pay off multiple existing debts. You or your consolidation lender will use the loan to pay off your creditors, and you’ll then make loan repayments to that one lender.
You can consolidate many types of unsecured debt, such as credit cards, store cards, medical debts and unsecured personal loans. The loan you use to consolidate these debts, meanwhile, can be unsecured or secured. If you have bad credit, you’ll increase your chances of approval if you secure the loan with collateral.
Should I consolidate debt if I have poor credit?
This depends on your personal financial situation and habits. Let’s say you want to consolidate credit card debt. Since credit cards typically have interest rates of around 20%, ideally, you’ll want the interest on any consolidation loan to be lower than that.
Unfortunately, interest rates on debt consolidation loans for bad credit tend to be higher than 20%, which means you could end up paying more for debt consolidation than if you just continued paying your credit cards.
Debt consolidation may still be worthwhile if it helps you manage a single lower payment and stick to a clear budget. Consider free credit counselling from non-profits like Credit Counselling Canada before applying for a consolidation loan with bad credit.
Are there guaranteed consolidation loans for bad credit?
No. Avoid lenders advertising guaranteed approval because this could be a scam. Legitimate lenders first need to review your finances before approving. They don’t guarantee approval.
Debt consolidation loans for bad credit, especially, should not have guaranteed approval because the combination of a low credit score and high debt load makes your application risky for a lender. If a lender seems too happy to give you a loan — and at very favourable terms — it’s not a good sign that they’re legit. You could be putting your finances and personal information at risk if you apply.
What is the minimum credit score for bad credit debt consolidation loans?
Minimum credit scores vary between lender to lender, but generally, lenders that offer bad credit consolidation loans want to see credit scores over 570, sometimes even 600.
Tips to increase your chances of approval
Don’t apply for too many loans. Only apply to one or two top choices. Lenders will do a hard credit check, and if they see you’re applying to many places, they’ll be more cautious about giving you a loan.
Apply with a cosigner. Having a friend or relative with good credit backing your loan makes you less of a risk to lenders and could get you a better deal. Learn more about cosigned personal loans.
Work on rebuilding your credit. If it’s possible, use the next six months to rebuild your credit first by paying down your debts and making on-time bill and debt payments.
How to compare debt consolidation loans for bad credit in Canada
Like any debt or loan solution, it’s important to compare your options to find the consolidation loan for you. When you’re comparing your options, keep in mind the following:
The lender. There are disreputable lenders who prey on those with bad credit, promising fair loans but then charging unreasonably high rates and fees. Verify that a lender is legitimate by checking out reviews from other customers and looking up ratings on sites like the Better Business Bureau and Trustpilot.
Fees. See what lenders are charging, and check your lender’s fine print to make sure there are no hidden costs. Some fees you might encounter include admin fees, NSF fees, late payment fees and prepayment penalties.
Interest rates. You’ll likely get offered high interest rates of up to 35%, so be sure to compare your options.
Loan terms. Your lender will likely offer a long loan term in order to lower your monthly payments. Generally, the longer the loan term, the more you’ll pay in interest. It’s possible to end up paying more interest than the loan amount.
How does debt consolidation affect your credit score?
If you already have bad credit, consider how a debt consolidation loan could further impact your credit score. Depending on which type of debt consolidation option you choose, consolidating your debt can affect your credit score in these two ways:
Your credit score can go down. Your credit score can go down even more when you initially sign up for debt consolidation. That’s mostly because creditors do a hard pull on your credit to check your eligibility, and because you take on new “immature” debt once you’re approved. Once you start making consistent payments, you should see your score start to climb.
Your credit score can go up. Your credit score will typically start to go up after a few months or years of making on-time and consistent payments. Just be aware that you’ll lose any progress you make on your credit score if you fall behind on your repayments.
What are the benefits of consolidating debt if you have bad credit?
There are various advantages to consolidating your debt when you have bad credit, including:
Paying a single monthly payment. By consolidating your debts, you’ll only have to worry about one monthly payment as opposed to several, so your debt is easier to budget for, and you’re less likely to miss a payment.
Getting more room in your budget. If you have a lower monthly payment, you can allocate more of your income to other areas.
Improving your financial position. Making on-time debt consolidation loan payments will help increase your credit score.
How to make a debt consolidation loan work for you
Not everyone who takes out a debt consolidation loan for bad credit improves their financial situation. It’s important to use these loans the right way, so you don’t worsen your financial situation:
Budget. Your budget will change as you’ll be paying for one big loan rather than several little ones. Make sure you know when your payment is due and pay it on time. Consolidating your debt won’t help your credit very much if your score dips because you miss payments.
Compare your loan options. To make sure you’re getting the best deal, compare your loan options before you apply. This will help ensure you get the option with the best rate and loan term.
Seek advice. If you’re struggling to consolidate your debts or are wondering how best to manage your payments, seek advice from a credit counsellor who can point out all your options and answer any questions you may have.
Don’t take on new debt. Once you get your consolidation loan, avoid the temptation to take on any new credit card, line of credit or types of debt until you’ve completely paid off your loan. Once it’s paid off, be mindful of how much debt you’re taking on to avoid ending up in the same situation again.
Alternatives to debt consolidation for bad credit
If you’re not sure getting a debt consolidation loan for bad credit is the best option for you, there are other alternatives to help you get out of debt.
Snowball debt management plan
If a new loan seems like too drastic an option, but you need help getting your finances in control, consider using the snowball method. Pay off your smallest debt first, then roll the payments you were making on that debt into your next smallest debt. As you keep paying off debt, your payments will get larger and larger, and you’ll be able to pay off all your loans faster.
Debt relief program
If you have more debt than you can afford to pay, no matter what the interest rate is, consider using a debt relief company, especially if you don’t qualify for a bad credit debt consolidation loan. These agencies negotiate with your creditors to lower your interest rates or monthly payments. You agree to begin paying off your debts through the agency in one or more affordable monthly payments — usually over three to five years — while the agency pays your creditors on your behalf. An example of a debt relief program is a consumer proposal.
Lenders may offer you a credit builder loan, but make sure it's the right product for you
Some lenders, like Spring Financial, offer credit builder loans, which aren’t consolidation loans but can help you rebuild your credit. With these loans, you won’t receive funds after you make on-time payments, plus interest. This may not be helpful if you need to consolidate debt right now. Also, getting a credit builder loan means taking on more debt overall, and if you fall behind on payments, you may not be eligible to receive any funds.
Bottom line
While a debt consolidation loan is often a viable option to consider if you’re trying to get a handle on your debt, the same solution won’t work for everyone. Before taking out one of these loans, make sure your new monthly payment and loan term will be worth paying more interest. Speak to a credit counsellor about other options that may be open to you.
Frequently asked questions
Alternative lenders are your best choice in getting a debt consolidation loan with bad credit. They have easier eligibility requirements than banks and credit unions. Many also have completely online processes, so you can get a debt consolidation loan without ever needing to leave your home.
It may be difficult to get a debt consolidation loan with a 500 credit score unless you secure your loan with collateral. Even then, you'll likely get offered high interest rates that may make your debt consolidation loan not worthwhile. If you're experiencing financial hardship, consider seeking credit counselling from a registered non-profit like Credit Counselling Canada.
Yes, there are plenty of consolidation lenders that operate online. You won't need to visit a branch to get your loan.
Most lenders will need to do a credit check. However, there are lenders of car title loans in Canada that don't do credit checks, and you can use their loan to consolidate debt. But keep in mind that car title loans are expensive if you have poor credit.
Leanne Escobal is a publisher at Finder with more than 12 years of experience in financial products and services, with a focus on content strategy and marketing. She has completed the Canadian Securities Course (CSC®) as well as the Personal Lending and Mortgages course through the Canadian Securities Institute. Leanne holds a Bachelor of Arts (Honours) in English literature and creative writing from Western University.
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Chelsey Hurst is a publisher at Finder, specializing in banking and investments. She loves empowering people to avoid financial pitfalls and make better decisions with their money. Chelsey has a Bachelor of Science from Redeemer University, a Master of Science from McMaster University, and has won multiple awards for research communication. In her spare time, Chelsey enjoys cooking and taking long walks in nature.
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Compare the best debt relief companies in Canada to help you get your finances back on track.
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