Credit card consolidation involves taking out a new loan in order to pay for previous debts you have incurred. The new loan is procured at a lower interest rate than previous debts, making it easier for you to pay off.
Time Frame
Initially, consolidating your credit card debt will neither increase nor decrease your credit score, according to Lending Tree.com. As you establish a history of paying down your debt consolidation loan on time, however, you will ultimately raise your credit score.
Considerations
A debt consolidation loan is a new debt that will appear on your credit report. However, because it is taken into consideration along with the rest of your credit report, your credit score as a whole will remain neutral unless you fall behind in your payments.
Warning
While a consolidation loan can help you to pay existing debts, be careful about closing existing credit accounts in the hopes of deterring yourself from spending money. Closed accounts will still remain on your credit report, but reducing your available credit total across all accounts will increase your existing debt-to-available-credit ratio. This can make you look like an increased risk in the eyes of lenders.
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