Consolidating your debt can affect your credit score. There might be a small drop in your credit score after consolidating debt, since you are taking out a new credit product or loan. You might also see a dip in your credit score if you settle a debt or work with a debt management service.
Some borrowers can see their credit score increase by consolidating debt, particularly credit card balances. Using a personal loan to pay off credit card balances will lower your credit utilization ratio, which can give your credit score a boost.
Whatever the initial effect has on your credit score, debt consolidation can help you increase your credit score over the long term. If you choose an option with affordable payments, you can build up a healthy payment history, which is central to a good credit score.