Debt consolidation combines multiple debts into a single, often lower-interest loan. This can simplify repayment and potentially save money on interest. However, it’s important to consider the potential impact on your credit score before consolidating debt.
Debt consolidation can have both positive and negative effects on your credit. On the positive side, it can reduce your credit utilization ratio, which is the amount of credit you’re using compared to your total available credit. A lower credit utilization ratio can help improve your credit score.