Some plans require you to become delinquent on your accounts in order to enter into the program.
Missing even one payment on an account will hurt your credit history and your credit scores.
A better option may be to find a reputable non-profit credit counseling company near you that can enroll you in a debt management plan.
[Learn More: Easy Way to Improve Your Credit] The way debt consolidation affects your credit depends on the various options you choose.
Whether you opt for a loan or a credit card, you’re applying for new credit and that means a “hard” inquiry into your credit. Quick Tip: Before start your consolidation plan, check your free credit score online, without impacting your credit report card.
Interest rates do not appear on a credit report; therefore, the interest rates on your credit cards do not affect your credit worthiness or credit scores.
While consolidating those debts into a single payment with a lower interest rate can help you pay off debt faster, you should be wary of companies offering debt consolidation plans.
Debt consolidation means taking out one new loan large enough to repay some or all of your outstanding debt.