If juggling multiple debts feels like trying to keep flaming bowling pins in the air, debt consolidation might sound like a dream. One payment, one due date, one fewer thing to stress about. But what does it actually do to your credit score?

Spoiler: it’s not all bad. But it’s not all magic either. Let’s break it down.

First: what is debt consolidation?

Debt consolidation is when you roll multiple debts (like credit cards, medical bills, or personal loans) into one loan—usually with a lower interest rate. The goal? Simplify your life and save some money on interest in the process.

You can consolidate through:

  • A personal loan
  • A balance transfer credit card
  • A debt consolidation company or program

So… will it hurt your credit?

Here’s the not-so-scary truth: it might cause a small dip at first, but it can actually help your credit in the long run if you play it smart. Here’s how:

What might lower your score (temporarily):

  • A hard credit inquiry. Applying for a new loan or credit card usually triggers a small hit—maybe a few points. Totally normal.
  • Lower average account age. New accounts can slightly reduce your overall credit age, which is a small factor in your score.

What helps your score over time:

  • Lower credit utilization. If you consolidate credit card debt and leave the cards open (without racking them up again), your usage drops—a good thing.
  • On-time payments. Paying consistently on your new loan = solid payment history, which is huge for your credit score.
  • Fewer accounts to manage. Less juggling means you’re less likely to miss a due date, which saves your score from taking a hit.

When consolidation might not help

If you’re still overspending or you rack up new debt while paying off the old one, consolidation just becomes a band-aid. Also, if the interest rate on your new loan isn’t better than what you had before, it may not be worth it.

TL;DR

Debt consolidation can be a helpful tool—and no, it doesn’t have to wreck your credit. In fact, if you use it the right way, it could actually boost your score over time. Just make sure you’re clear on the terms, have a plan to stay on track, and don’t treat it like a financial reset button.

Brigit does not provide personalized financial, investment, or legal advice. This content is for general informational purposes only and should not be relied upon as financial advice.