Not only does this make budgeting and paying your monthly debts easier, but it also allows you to pay off your debt faster with more of your payments going toward the actual debt rather than the interest.People with good credit can normally go the DIY route when it comes to consolidating their debt. In some cases, debt consolidation can help your credit score. It can also depend on which option you use for consolidation, since there’s more than one way to consolidate your debt. When you consolidate debt, you have a payment plan that you’re supposed to follow.For the most part, if you use the right option for debt consolidation for your circumstances, it shouldn’t hurt your credit score. If you follow that plan correctly, this means you’re making payments on time and taking steps to cut your debt load.If you’re struggling to make the minimum payments on your debt, missing due dates and not making any substantial headway in the process, you’re credit score likely already mirrors your situation.After all, these three numbers are supposed to be the quickest snapshot of your financial health and ability to repay creditors.
So the first step in debt consolidation is simply to consider whether it will actually work for you.Oftentimes, people wind up with multiple types of debt—typically in the form of credit cards—with varying interest rates and varying amounts owed on each card.It can be difficult to keep track of the monthly payments and some wind up with more debt than they can handle.Debt consolidation allows borrowers to roll multiple old debts into a single new one.Ideally, that new debt has a lower interest rate that makes payments more manageable or lets borrowers pay off the total more quickly.