Will debt consolidation damage my credit score?

When you decide for debt consolidation it may seem that you have some financial trouble. You cannot carry the burden of a few loans and you consolidate all the debt into one.

Then, you make only one payment every month, what is more, it often allows you to pay a lower interest rate. So, is it only the matter of financial trouble?

Or you maybe try to find a more beneficial and convenient way to pay off your debt? As they say: circumstances alter cases.

Generally, debt consolidation is beneficial and can be some kind of relief for the indebted.

But on the other hand, it is obvious that it must have some impact on your credit score as well. The question is whether it is a positive or a negative one.

Good or bad for my credit score?

There is a good news. Debt consolidation influences your score positively. How is it possible if it looks like you are admitting that you have trouble with paying your debt off?

Credit score is a number, issued by credit agencies, which is a result of the analysis of your credit history and evaluation of your creditworthiness. Then, potential creditors can check your score to assess the risk of cooperation with you.

These websites offer free credit score to all consumers. Make sure to read reviews first:

Is your debt consolidation making you more or less creditworthy?

Actually, the fact of paying off a few accounts using the consolidation loan, for credit agencies means…just paying off the accounts.

It does not matter that there is a new account opened for your debt consolidation loan, the fact of paying the accounts in full remains the advantage and is good for your credit score.

However, one thing is crucial here. When you have your new debt consolidation loan to pay off, you must definitely remember about regular, on time payments so that your score is not damaged.

In general, making on time payments always brings a positive effect on credit scores. And contrariwise, missed or late payments have a negative influence.

What should I not do if I do not want to damage my credit score?

Apart from already mentioned missed and late payments, rather avoid starting other credit card accounts. But if you have to do this, always pay the bills immediately.

Furthermore, do not close credit accounts. It will lower your amount of credit available, and it will change your ratio between debt and limit. Closing the newest accounts is the least hurtful, but avoid closing the old accounts, since they are the source of your credit history.


Need a good credit score? Don’t worry. Debt consolidation itself is not a sign of your financial problems for credit agencies. If you handle your consolidation loan well and always remember about on time payments, it is a sign of your resourcefulness and responsibility.

That is why, you do not have to reject the idea about debt consolidation loan. It does not automatically mean damage for your credit score.