Question: Is Debt Consolidation Good For My Credit?

"I can keep up with my monthly payments and pay a little off my balance each month, but I'll be looking at getting a home loan soon and want to do whatever I can to improve my credit score. Is debt consolidation good for my credit?"

Debt consolidation in itself is neither good or bad for your credit.

Assuming you were paying all your bills on time, an abundance of debt doesn't really a negative effect on your credit report. It may affect your ability to acquire new credit, because lenders and funders won't want to extend more than they think you can afford, but if anything the fact that you're keeping up with those bills should help with your score.

Getting a consolidation loan would simply show up as another debt on your account, but the debts you pay off will also be removed - so it should all balance out. There's no delinquencies on the payments for the new loan, nor any payments made as of yet, so there's no positive or negative impact.

If you're having a hard time keeping up with your bills and it's resulting in late or delinquent payments - then anything you can do to rectify the situation and make timely payments will of course improve your credit. That means if your current situation is having a negative effect on your credit, debt consolidation is "good" for fixing it - provided you keep up timely payments on the new loan.