Some readers who have bad credit mention unsecured loans as a means of consolidating their debt.
In theory, it is possible to get an unsecured loan to consolidate debt.
Peer-to-peer (p2p) loans are, as the name suggests, loans between people that are mediated by a third party.
In some p2p loans, the borrower writes a proposal and investors choose whether to fund the loan.
In other p2p loans, an intermediary funds the loan, combines the loan with others, and sells shares in the loans to investors. There is no tax consequence for a 401(k) loan that is repaid.
A cash-out refi or a HELOC requires good to excellent credit, strong DTI, and most importantly, significant equity in the home.
The days of 100% financing are gone; most lenders do not offer cash-out financing above 80% of your home's value.
If you have equity in your home and your DTI and credit score meet lenders' guidelines, a cash-out refi likely offers you the lowest interest rate long term financing possible.
However, there are significant risks to loading your home with debt.
For these reasons, if you don't have strong credit and are seeking a debt consolidation loan, you should look for a debt consolidation program or think creatively about a loan source.
It's very hard to qualify for a debt consolidation loan with bad credit. has pre-screened debt relief providers who can help you understand the different debt solutions available.
A home equity loan is a popular type of debt consolidation loan.
Tighter lending guidelines along with a significant drop in property values in many parts of the country have made this kind of secured debt consolidation loan more difficult to obtain.