Does Debt Consolidation Hurt Your Credit?

Debt consolidation can lower your monthly payments and help you get out of debt faster, but it can also cause a minor dip in your credit score.

That’s because applying for new credit — like a balance transfer card or a debt consolidation loan — triggers a hard inquiry of your credit, which temporarily lowers your score a few points.

But if you use debt consolidation to successfully pay off your debts, consolidation will likely help your score in the long run.

Debt consolidation has the potential to help and hurt your credit score, but if you successfully pay off your debt and avoid too much debt in the future, the overall effect should be positive.