Does Debt Consolidation Hurt Your Credit?
The post Does Debt Consolidation Hurt Your Credit? by Benzinga Contributors appeared first on Benzinga . Visit Benzinga to get more great content like this. Anyone juggling three or four credit card bills has probably seen an ad promising to roll them all into one lower monthly payment. With Americans carrying nearly $1.26 trillion in credit card debt as of mid-2026, just shy of the record set at…
Debt consolidation can temporarily lower your credit score, but typically this effect is minor and short-lived. This happens due to a hard inquiry and the creation of a new account. Over time, consolidation is likely to improve your credit score. This is because it reduces credit utilization and maintains a positive payment history, which are the two most significant factors in determining your credit score.
The process does not necessarily ruin your credit, as some people fear. However, debt settlement, which involves paying creditors less than the total amount owed, can have a more lasting negative impact on your credit score.
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