| Consolidation loan | Nonprofit DMP | |
|---|---|---|
| Credit needed | Usually fair to good (about 640+) | No minimum score |
| Typical rate | About 7–24% depending on credit | Often about 6–10% on cards |
| Fees | Origination fee, often 0–8% | Small setup and monthly fees, often $25–50/mo |
| Your credit cards | Stay open (tempting to reuse) | Usually closed |
| Who you pay | The lender | The counseling agency, which pays creditors |
| Timeline | 2–7 years, your choice | 3–5 years |
| Credit impact | Hard inquiry, then usually positive | Minimal; closed cards can affect score |
Pick a loan if
- Your credit gets you a rate well below your cards' rates.
- You want to keep your cards open and trust yourself not to use them.
- You'd like to choose your own term.
Pick a DMP if
- Your credit won't get you a good loan rate.
- Closing the cards would actually help you.
- You'd like a counselor in your corner and fewer decisions to make.
Full guides: consolidation loans and credit counseling. Check where you stand with the DTI calculator.