How to Consolidate a Loan Without Collateral

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The concept of a debt consolidation loan is simple: an applicant applies for a loan to cover the costs of his existing bills, e.g., credit card bills, medical expenses and payday loans, and repays the loan at a better rate and over a longer period of time. To minimize risks, many lenders require collateral. It is not impossible to obtain a debt consolidation loan without collateral, but you must meet all the requirements set forth by the lender.

Purchase a copy of your credit file and score before applying for a loan consolidation. The major credit bureaus – TransUnion, Experian and Equifax – offer a variety of credit report products and services for fees ranging from $10 to $40, as of 2011.

Review the number and severity of the potentially negative items currently documented on your credit file, such as delinquent payments to creditors and unpaid collections accounts.

Contact a debt counselor or lender specializing in no-collateral loan consolidation. Discuss your credit file and score – the counselor may request a copy of your credit file to verify eligibility. Ask if you qualify for a no-collateral loan consolidation and inquire about the terms and conditions of the loan.

Check that you have an acceptable amount of debt. Debt consolidation loans are sometimes subject to minimum and maximum debt amount. Frequently, debt within the $5,000 to $15,000 range is acceptable. Calculate your debt total by adding the amount owed on each account.

Apply with a co-signer if your credit file, score and total debt disqualify you from applying on your own. Choose a co-signer with good to excellent credit. Inform the co-signer that by signing the loan agreement he assumes equal responsibility for the consolidation loan and must repay the total loan amount if you should default.


  • Request a copy of your free annual credit file, without score, if you have not already. Visit Annual Credit Report's website for details.


  • Frequently, lenders prefer an applicants to secure a debt consolidation loan with collateral, such as real estate.