Does this affect my score as bankruptcy does

does this affect my credit score in the same way a bankruptcy would?

No it doesn't. When you consolidate through a credit counseling service the most it should report as is third party payment. This just means that you didn't pay it but the debt was still paid. Most of the time this will not even show because creditors really don't care WHO is paying them as long as they get paid. That is what Equifax told me when I asked.

debt consolidation is no where close to bankruptcy in terms of how it affects your credit score. Technically, debt consolidation (not settlement), or credit counseling, has no direct effect on your score. As the poser above stated, your creditors can put a note in your credit report that says you are in credit counseling. This has no effect on your score, but lenders can see it and interpret it as they wish. However, you generally are required to close your credit accounts that you consolidate. This, in many cases, can cause a temporary drop in your score because it affects your credit history, amount of credit available, etc. BUT, as you begin to pay these accounts off (much faster in a consolidation program), your score will rise back up. If you are having trouble making your payments, or are getting behind or close to your credit limits, it is well worth it to close these accounts. You will come away from the consolidation with a better score than what you had when you started. A bankruptcy, on the other hand, has a HUGE negative impact on your credit score. This can be reported on your credit for 10 years, while the not saying you are in debt consolidation comes off immediately after you leave the consolidation program. I hope this helps, please let me know if you have any questions.

dmj, I think the term freeze is most suitable here instead of closing. Once the consolidation program is over, the accounts are again usable. Temporary freezing of accounts is done for the sake of consumers' benefits.

An open account with good standing can hurt credit score, but if the account is having negative status, it will not hurt that much, JMO.