Does consolidating debt affect credit score

Consolidating is often the smartest move, but in some situations, it could be more savvy to keep federal loans separated from private loans.

Most often, though, we hear the term in reference to consumer debt. ” Debt consolidation, when undertaken using a sound lender completely on the up and up, can help reduce your monthly payments while increasing your credit score.

While having a plethora of credit lines can be detrimental to your credit, having a handful of well-managed debts can boost your score over time.

One thing to keep in mind, as your monthly payments go down, your ration of debt-to-income also goes down – this factor is particularly important as you go forward and try to open more lines of credit in the future (like mortgage loans, specifically).

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