The end result is impossible to gauge ahead of time – as it depends on multiple factors, including the extent of your credit history, the accounts you have open, and the actions you take after consolidation.
In most cases, however, debt consolidation will lead to long-term credit score gains, since it will decrease your odds of default and put you on more stable financial ground.
When you’ve worked your entire life to maintain a relatively good credit score, the last thing you want to do is damage it.
Consolidation is not right for everyone, make a decision that's right for you. Your payments will remain the same until all the creditors are paid off. You must keep up with your monthly statements and forward them to the consolidation agency. You can't use your credit card until you're done with the debt management plan. A debt management plan is not bankruptcy, but it will appear negatively on your credit report. Here's what you need to know about consolidating accounts through a debt management plan with an agency. Instead, they have preset arrangements with most financial institutions, many of which lower interest rates and fees, so more of your payment goes toward the balance rather than finance charges. With something as precious as your finances, be exceedingly careful about who you work with.
Their debt management plans can help you get back on track -- but they can also be unnecessary and even detrimental when done through a poorly run organization or for the wrong reasons. These agencies do not make loans, nor do they settle debts.
These cases are the most extreme and you might not have much of a choice.
For many of us, there are still a handful of options to think through.
Simply put you get a new loan, which has better terms and a lower interest rate, to pay off your other debts.