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Use Debt Consolidation to Raise Your Credit Score

Updated: Jan 19, 2023

Debt consolidation is a form of debt management that allows you to find a way out from under-debt while still avoiding bankruptcy, garnishment, and other extreme financial measures. Debt consolidation allows you to use one loan to pay off all other accounts and loans you have, leaving you with one monthly payment and interest rate. This can help your credit score by allowing your current accounts, regardless of status, to be considered paid and in good standing. You also open another loan account that shows a certain good credit level. It then becomes your responsibility to pay the payments on time to keep the debt consolidation as a positive loan in good standing.

There are many debt consolidation companies, and there are fly-by-night scam companies to watch out for in any consumer-driven industry. When looking for a debt consolidation company and loan, take the time to do a little research and learn as much as the company and the people who work for that company as you can. You should also ask for references to talk with real people who have experienced the company and staff members you are considering. The company and employees should be trained and certified to work on debt consolidation cases and offer debt consolidation loans that are reputable and quality.

Before contacting a debt consolidation company, you should take the time to get your debt in order. This includes making a list of all the debt you want to include in the debt consolidation. For each item you include on the list, the following things should be included: creditor, creditor contact information, monthly payment, interest rate, and current balance. This will give you an idea of your debt and the basic information about each one. You also need to total it all up and write it in big numbers on top of the list. This is often one of the hardest parts of debt consolidation, as you have to look at the whole picture, and if you haven’t been keeping track along the way, it can be overwhelming. But, this is among the first steps to taking control of your debt instead of letting it control you.

Debt consolidation can also be followed by other debt management tactics, like debt negotiation, that can help minimize the debt to allow you to take out a smaller loan and save you more money in the long run. Many credit counselors are trained in the art of debt negotiation and should offer that as a service with your debt consolidation. When you negotiate your current debt, you have the opportunity to settle at a lower amount than the current balance, which helps your debt consolidation loan and your repayment over the life of the loan.

If you are looking for a way to get out from under debt and help your credit rating and score, debt consolidation could be the right choice for you. Debt consolidation is a smart way to get rid of debt while still preserving the integrity of your credit report and can boost your credit rating. When all your debts are paid, this changes the account status, and when your credit score is recalculated, it should reflect this new positive status and boost your credit score. This can bring you hope and instant success in getting your debt under control.


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