Many people will rush to get a debt consolidation loan or go to credit repair services not even asking whether or not it is going to possibly hurt their credit score. The truth is it may or may not, but you may want to seriously consider the possibility – as well as a few other details – before you make the move to use debt consolidation services.
One thing that will hurt your credit score more than anything else is late payments. A larger percentage of the calculation of your credit score comes from this factor.
A debt consolidation company, if it is careless – like some of them are – could make several late payments and increase your debt considerably. It is no concern of theirs, since you will be paying until the debt is completed. Of course, since you are paying monthly, that means that more would go to them, too.
Craig Watts, who is the public affairs senior manager for Fair Isaac Corp (FICO) says "Frankly, we think consumers who participate in credit counseling shouldn't be punished in their FICO scores." You can be sure that not every one who is looking at your credit report will think the same way. Other will simply look at the score and make their determination.
You are better off simply talking to your creditors and getting a reduced interest rate. Then, pay off your bills one at a time, and do not use your credit cards anymore. Discover the beauty of being debt free.