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Bill Consolidation Loans [Bad Credit Ok]

Dan Steadman

Financial Advisor, MoneyBeagle

Advantages of Bill Consolidation Loans

No one likes it when bills stack up. What’s worse is that in addition to owing more for each bill you have, you also have to struggle to keep track of them. It’s easy to see how this can result in a situation where you’re struggling to pay your bills on time.

Thankfully, debt consolidation loans can help. This article will cover everything you need to know about these special financial products. That includes helping you understand what a bill consolidation loan is, what the benefits are, the different places you can get a bill consolidation loan, and finally what to look for in the best loans. Use this information to jump start your financial planning and get out of debt faster!

What is a Bill Consolidation Loan?

Bill Consolidation LoanA bill consolidation loan is a special type of financial product. It works by totaling up all of the balances on your bills. Then you take out a loan for that amount. The lender sends the money to the people that send you bills. This pays off the balance you owe with those companies.

This consolidates all of your bills into one loan. There are a lot of benefits to using this method to pay off your bills. We’ll cover those benefits and how to pay off debt quickly in the next section.

How to Use Bill Consolidation Loan

You can use bill consolidation for any number of things. Most people use it to lower the interest they’re paying on their current bills. They also use it to restructure their debt in a way that allows them to get out of debt faster. You can use a bill consolidation loan for any kind of bill. That includes credit card bills, auto loans, personal loans, store or manufacturer lines of credit, and more.

A consolidation loan has several advantages to paying your bills as they currently exist. It’s easier to track, simplifies your budget planning, allows you to pay your bills off faster, and helps you save money in the long run by spending less on interest. We’ll look at each of those benefits in greater detail.

Easy to Track

First, a bill consolidation loan makes it easier to track your debt. That’s because all of your debt is concentrated in one place. You don’t have to track multiple balances across different lenders. That makes it easier to understand what your actual total debt is. It also makes it easier to track the progress you’ve made in paying off your debt.

This can provide a huge psychological boost, which can be the key to staying on track and getting out of debt. After all, it can be disheartening to see multiple balances creep down a bit at a time. You get a much clearer picture when you see chunks of debt come off your balance. That shows you how much progress you’re making.

Simplify Budget

Most people think about making a budget only in terms of dollar amounts. However, that’s not entirely accurate. Instead, you also need to consider the timing of each bill and its due date. Most people get paid every week or every other week. That means you need to align your budget to match when you get paid.

This can be tricky when you’re dealing with lots of different bills that have different due dates. A consolidation loan changes all of that. Instead of worrying about multiple bills, you just need to worry about one major due date. That makes it easy to plan your finances. It also makes it easier to stick to a budget. As a result, you’ll be more likely to successfully get out of debt.

Pay off Bills Faster

Another advantage of a bill consolidation loan is that it lets you pay off your bills faster. That’s because of the way interest works. Many people use a credit card consolidation loan to cover credit card bills. Credit cards accumulate interest charges. That means that more of your payment each month goes towards paying off interest.

Additionally, a good consolidation loan will offer an interest rate much lower than your current rates. That’s especially true for credit cards and high-interest personal loans. That means more of your payment goes toward the principal balance. As a result, you’ll get out of debt much quicker.

Spend Less on Interest

Another benefit of a lower interest rate is that you’ll spend less on interest overall. That doesn’t just get you out of debt faster, it also saves you money in the long run. The result is that you get to keep more of the money you earn. This can make a huge difference when you’re getting close to paying off your debts and want to spend some of your hard-earned money to enhance your lifestyle.

Bill Consolidation Loan Sources

There are lots of places that you can get a bill consolidation loan. This section will look at some of the most common sources. We’ll discuss the relative advantages and disadvantages for each to help you narrow your search for the best consolidation loan for you.

Debt Relief Company

One of the most common sources of consolidation loans are debt relief companies. These companies specialize in helping people get out of debt. It’s important to do research if you use a debt relief company. Some of them will offer you other options that aren’t as good as a consolidation loan for bills. Also, some of them don’t even have a bill consolidation loan option.

The best thing about these companies is that they’re more willing to work with people that have lower credit scores. If your credit score isn’t good enough to get a loan from the other sources on this list, then a debt relief company is a good place to look.


Traditional brick-and-mortar banks also offer consolidation loans for bills. The bank will frequently cut you a better deal if you’re a long-time customer. They also provide the option of talking face-to-face with someone about your loan and financial situation. This can make it easier for people to fully understand the product. It can also make it easier to convince them to give you the loan in the first place.

The downside of banks is that they have a longer application process. That means you might have to wait longer before your bills get consolidated. Also, banks usually have higher credit score requirements than other lenders. That can make getting a loan more difficult if your credit has taken some hits. Finally, banks have more costs and overhead than most other lenders. That means you can expect to pay a higher interest rate if you consolidate your bill payments through a bank.

Online Lender

Online lending is an increasingly popular option for people looking to consolidate their bills. Online bill consolidation loans offer several advantages. First, the application process and disbursement are much faster than other lenders. Most borrowers get their funds within 48 hours or less. Additionally, there are many online lenders that are willing to look at other factors besides your credit score. That can make the difference between getting approval and getting denied.

However, online lenders have a wider range of interest rates. That means the lowest debt consolidation loan rates are in line with the best rates you’ll get from other lenders. However, the higher end of their interest rates is much higher than other lenders. Some lenders charge interest of up to 35%. That means you’ll want to be sure that the loan will actually save you money based on its interest rate before you accept it.

Home Equity Loan for Bill Consolidation

If you own your home, then a home equity loan is a great option for bill consolidation. That’s because this is a secured loan. You’re borrowing against the value of your home. As a result, the loan is less risky for the lender. That means you can expect a better interest rate.

Home equity loans aren’t right for everyone though. First, you’ll want to be extra sure that you can meet the loan payments. If you default on the loan, then you’ll lose your house. Even if the lender doesn’t repossess your home, you’ll lose the equity you’ve established in the property.

That means the lender can place a lien on the house. If this happens, any money from selling the house goes to the lender first to pay off your debt. That can cause serious problems when you have to move and are counting on the sale of your current home to fund the purchase of your next home.

Getting the Best Bill Consolidation Loan

Now that you understand how a bill consolidation loan works and where to get one, we’ll cover the things you should look for to get the best deal on a consolidation loan. Every lender will offer different details on a loan. You should use this section to compare your different loan options and find the one that’s right for you.


The first thing you’ll want to compare between consolidation loan offers are the rates. The lower the interest rate, the better the loan. That because a lower interest rate means more of your payment goes toward the balance of the loan.

When more of your payment goes toward the loan balance, you’ll pay off the loan faster. You’ll also pay less in interest overall, saving you money in the long term. The best way to see how much you’ll save is to average your current interest rates. Add all of the interest rates together and divide the total by the number of accounts you added. That will tell you your average interest rate.

However, financial math can get complicated. Your average interest rate won’t help much if you have a lot of debt concentrated in a few accounts and a little debt spread over multiple accounts. That’s because the balance on those accounts influences how much you’ll pay in interest over the course of the loan. You can use one of the many online debt consolidation calculators to see if your loan offer is a good financial decision.


The next thing you’ll want to check are the terms of the loan. That means how long you’ll have to repay the lender. Many debt consolidation companies offer flexible options for terms. Some people use longer terms to lower their monthly payment. However, when you take a loan with longer terms you’ll wind up paying more in interest. That’s because the interest has a longer time to affect your balance.

Because of this dynamic, we recommend using an online debt consolidation calculator to see what your best option is. You should plug in the different consolidation loan options you’ve got. The calculator will show you how much you’ll pay overall in interest for each one.

Also, your individual financial situation plays a role here. It may be worth it to pay more in interest if lowering your monthly bill is the best way to ensure you make your payments on time. Once again, using online tools can help you navigate this complex mathematical web.


Finally, be on the lookout for any fees associated with the loan. Financial products are notorious for charging random fees to customers. These fees could include origination fees, check processing fees, service fees, early payoff fees, electronic security fees, and more. We recommend comparing the APR of different loans. APR takes all of the fees into account, so you get a more accurate apples-to-apples comparison across the different loans.


As you can see, bill consolidation loans are an excellent option to simplify your budget and bills, pay off your debt faster, and save money while you do it. However, this option isn’t right for everyone.

That’s why it’s important to carefully consider the costs and benefits of taking out a new bill consolidation loan. Make sure you’re getting a better deal that you’re currently paying. Make sure your interest rate is lower than your average interest rate, and that you’ll be able to meet your payment every month. But if you do it right, you could be out of debt faster than you thought possible!


Many people don’t entirely understand what debt consolidation is and how it works. When you’re drowning in credit card debt and medical bills, debt consolidation can be a life saver if done right. Unbeknownst to some, your credit score is still an important factor when lenders consider you for a debt consolidation loan.

For this reason, it’s vital to consider consolidating your debt before it is too late. To help you better understand how debt consolidation works and how your credit score comes into play, we came up with the top questions that consumer have.

Debt Consolidation and How it Works

There’s no doubt that debt consolidation is one of the most popular ways to manage and control debts. This clever technique takes various high-interest debts and lumps them together under one loan with a lower interest rate. In turn, you have higher capacity to pay your other debt and increase your credit score.

Debt consolidation isn’t for everyone, however. Taking out additional loans could hurt your credit score if you don’t successfully pay off the other debts. Consider the below questions when it comes time to decide if debt consolidation is right for you.

What is Bill Consolidation?
Bill consolidation is when you lump together multiple debts (such as medical or credit card bills) and pay for them in a single monthly payment. You don’t always have to take out a loan to consolidate your bills.
Are bill consolidation loans a good idea?
Yes, depending on your situation, bill consolidation loans are a good idea. Bill consolidation loans combined multiple debit payments into one monthly payment. Consolidation makes it easier to track payments and secure lower interest rates.
What are the disadvantages of consolidation?
If you consolidate debt with an unsecured loan, your assets are at stake if you can’t make payments on the loan. In addition, some debt consolidation companies charge a hefty fee to use their services.
Is it bad to consolidate your debt?

No, it’s not necessarily bad to consolidate your debt. Most people choose to consolidate their debt because it makes it easier to manage multiple payments and helps them save money in the long-run. Read more: Does national debt relief affect your credit score?

What is the best debt consolidation company?
Each debt consolidation company has its pros and cons. Based on a number of online reviews, many sources consider National Debt Relief, Freedom Debt Relief, and New Era Debt Solutions the best.
Are debt consolidation loans a good idea?

Yes, debt consolidation loans are a good idea because they have lower interest rates than credit cards and provide a steady inflow of cash to pay off older debts. Making the payments also becomes more streamlined. Take a look at the best loan for debt consolidation.

What is the best way to consolidate your debt?
The best way to consolidate debt is to take out a personal loan or transfer the debt to a credit card that has a low introductory interest rate. You can put the money you save on interest towards the principal amount.
How does debt consolidation work?
Debt consolidation takes all your debt payments and lumps them into one monthly payment with a single interest rate. You can obtain a debt consolidation loan through a bank or debt consolidation company.
What is the best way to consolidate credit card bills?

The best way to consolidate credit card bills is to transfer the debt to a different credit card with a lower interest rate. Not only does it become easier to manage the payments, but you can also save a lot of money. You may also consider getting a personal loan to consolidate credit card debt.

Debt Consolidation and Your Credit Score

Like credit cards and home mortgages, debt consolidate does have an effect on your credit score. The good news is that debt consolidation mostly helps your credit (aside from the very beginning). Not paying your bills will hurt your credit score much more in the long-run.

In order to get a debt consolidation loan, it’s necessary to have a decent credit score. The below questions will help clear up confusion about debt consolidation and your credit score.

Do debt consolidation loans hurt your credit score?

Yes, and no. Debt consolidation loans can hurt your credit score in the beginning but tend to help your score later on. The initial ding on your credit score is when the creditor inquiries about your score. Take a look at Chase debt consolidation loans. After enough credit report dings I personally had to learn how to fix my credit.

Can I get a debt consolidation loan with poor credit?

Yes, but it’s not easy. A handful of lenders will consider you with a credit score of 580. Most lenders require a credit score of at least 620. Those with poor credit can still qualify for a debt consolidation program over a loan. You'll want to find a debt consolidation loans bad credit direct lender.

Does bill consolidation affect your credit?

Yes, bill consolidation does affect your credit. Most people’s credit increases after consolidating their debt because they clean up delinquent debts because “amounts owed to creditors” makes up 30% of your FICO score.

How can I consolidate my bills with bad credit?

While bad credit makes consolidation difficult, a non-profit consumer credit counselling agency may be able to assist you. These agencies help individuals find debt consolidation bad credit options that accept lower credit scores.

What's the difference between bill consolidation and bankruptcy?

The main difference between the two is that bankruptcy protects you from paying creditors for three to five years and bill consolidation is when you pay off multiple debts in one monthly payments. In addition, consolidation doesn’t hurt your credit as much.

Do bill consolidations require closing credit cards?

Yes, and no. If you consolidate your bills using a personal loan, you won’t have to close credit cards. On the other hand, if you transfer your debt from credit cards, you might choose to close them.

What does debt consolidation do to your credit?

Debt consolidation can help your credit if it helps you pay off delinquent debts and make more timely payments. At the beginning, your credit score might decrease when you apply for debt consolidation, the creditor inquires about your credit (a hard pull). 

Is it smart to consolidate debt?

Yes, it’s usually a smart choice to consolidate debt. Consolidating your debt not only lowers you monthly interest payment, but also improves your credit score by lowering your debt utilization score. Just make sure you look at how reputable the company is that you decide to use. For example, check out Freedom debt relief bbb reviews.

The Different Types of Bills You Can Consolidate

From medical expenses to student loan debts, there are many bills you consolidate into one monthly payment. Banks, credit unions, and debt consolidation companies, such as Avant debt consolidation, all offer private loans and assistance with consolidation.

When your bills get out of control, consolidation is inarguably one of the best options to manage them provided you qualify for a low-interest loan. Below is a compilation of the most common questions regarding the types of bills you can consolidate.

How to consolidate medical bills?

An effective way to consolidate medical bills is to sign up with a debt management program and include outstanding medical payments. Another option is to pay them off with a debt consolidation loan.

What is chapter 13 bill consolidation?

Chapter 13 is a form of bankruptcy where you are protected from creditors for three to five years while you pay off your outstanding debt. Filing for chapter 13 bankruptcy can be detrimental to your credit score.

How to consolidate bills into one payment?

You can consolidate bills into one payment by taking out a loan with a commercial lender and signing up for a bill consolidation program. The company you sign up with will merge all your bill payments into one. Read more: should I consolidate my credit card debt?

How does bill consolidation work?

In order to consolidate your bills, you have to take out a low-interest personal loan for a set amount of time. After taking inventory of your debt, a bank, credit union, or digital lender can consolidate all the bills into one.

Do banks do bill consolidation?

Yes, almost all major banks and credit unions do bill consolidation. Almost every bank has a debt consolidation calculator on their website, so you can get an idea of how much you’ll save.

Can medical bills be included in debt consolidation?

Yes, you can include medical bills in debt consolidation. In fact, many people use debt consolidation for unpaid medical costs because they can’t manage the payments otherwise.

How many types of bill consolidation loans are there?

There are two different bill consolidation loans – unsecured and secured. A secured loan uses collateral and an unsecured loan does not. If you default on a secured loan, your assets could be at stake. There are bank options too such as a debt consolidation loan USAA offers. There may be debt consolidation military loans too but double check with your finance department or the VA.

What is the best bill consolidation company?

The best bill consolidation company depends on your credit score and financial history. According to financial experts, one of the best companies for low credit is Avant and for average credit, Marcus by Goldman Sachs.

How to consolidate high tax bills

You can’t consolidate tax bills the same way you consolidate credit card debt. Instead, you can enter an installment agreement with the IRS where you pay off your debt in monthly payments.

How to consolidate money and bills after marriage

Newlyweds can consolidate the money and bills after marriage by taking out a personal loan in both of their names. With the help of a debt consolidation company they can merge together multiple payments into one.

What is homeowner bill consolidation loan?

A homeowner bill consolidation loan is a loan that lets you merge your various forms of debt into your mortgage payment. Since mortgages have lower interest rates, debtors save money in the long haul.

Can I consolidate my bills while unemployed?

Yes, you can consolidate your bills while unemployed if you put up collateral. Since most lenders won’t loan to anyone unemployed, using your personal assets as collateral could help your chances.

What bills can be consolidated?

The bills you can consolidate include payday loans, medical expenses, credit card bills, back rent, student loans, and court judgements. Almost all forms of debt can be consolidated.

Where can I get help in consolidating my bills?

The best way to get help with consolidating your bills is to call a non-profit debt counselor. Private lenders may offer biased information to sway you into using their services, so using a non-profit is preferable. Take a look at Lendingtree reviews debt consolidation options included.

Dan Steadman

Dan Steadman

Financial Advisor, MoneyBeagle

Dan is one of the top financial experts when it comes to debt consolidation. With more than 20 years of experience helping people tackle debt, he has a unique insight when it comes to solving debt-related problems. 

Dan got his start when he went to work for a bank after getting his Business Degree. He worked his way up and became a loan officer. This position gave him unique insights into the ways that financial products work and how people can utilize different financial products to improve their lives. He’s seen hundreds of success stories and just as many failures – so he knows what steps are most likely to help his readers.

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