FICO, which issues the most popular credit score, treats installment loans differently than revolving debt like credit cards.
Regardless of whether your credit card accounts are closed, you will likely be counseled to stop using them and to refrain from opening any new credit card accounts.
Whether your debt consolidation is handled by a professional consolidation company or if you do it yourself by taking out another loan, home equity line of credit, or credit card, consolidation will give your credit score a mild bounce initially.
We are the Consumer Financial Protection Bureau (CFPB), a U. government agency that makes sure banks, lenders, and other financial companies treat you fairly. Consolidation means that your various debts, whether they are credit card bills or loan payments, are rolled into one monthly payment.
If you have multiple credit card accounts or loans, consolidation may be a way to simplify or lower payments.
Professional debt consolidation companies provide loans after speaking with your lenders and confirming payoff amounts with them.