Credit Score

As far as I know, enrolling in a debt consolidation program does not affect your credit score. However, while going for debt consolidation, you'll have to miss some monthly payments on your accounts. This missing of payments will affect your credit score and lower it by some points.

Debt consolidation will not ruin your credit score. Rather it may help you restore your credit in the long run. However, you need to handle your credit responsibly.

Enrolling in a debt consolidation program will tank your score major time! You are not paying as agreed and your rating will drop as all the accounts will be closed by the creditors. Over the long haul after the program has been completed, you will have the opportunity to improve it.

Hey Soaplady, I saw your answer before my reply. However, your original post is missing for some reason. Anyway, in your original as well as in the last reply you have said that debt consolidation does hurt credit score. However, as far as I know, debt consolidation program does not have a negative impact on credit score. You can check this point from the following page (check the " How does debt consolidation program help you" section).
http://www.debtconsolidationcare.com/program.html

Have you seen a credit report with someone in a debt management program? I have. Your article does not give the whole story.

Negative impact.

All credit lines lowered to the balance owed and account closed.
Since the payment is generally lower than the agreed amount/monthly payment, a lot of creditors will mark the tradelines as late.
A lot of these debt management programs also send payments out the creditors in bulk, maybe twice a month. There are often delays between the time that your payment is received and and the creditor gets it.
Debt management programs are done in "voluntary cooperation". There are times that a proposal is submitted to the creditor and creditor turns it down. Many times the debt management program will ignore the denial and just send the payment in without informing the consumer.

A consumer who enters one of these programs who is already behind on their payments, will see a minimal impact as their credit already is negative. However someone who is up to date on their payments will see a huge drop in their ratings, possibly up to 200 points.

In order to see the benefit, the program must be completed. Some creditors will adjust their tradelines once the plan is completed. It takes time and patience for a credit report to recover. And responsible credit use.

Hey Soaplady! I was only answering the OP's question:)

Quote:

I guess someone deleted my post. I’m posting it againthough.

I have gone through the process of debt consolidation myself. Frommy own experience what I can tell you is that enrolling in the program had notlowered my credit scores. However, after enrolling in the program, my debtconsolidation company asked me to go delinquent on my accounts so that they canbetter negotiate with my creditors. It was at this point of time that my creditscore got dropped by few points.

Debt consolidation may lower your score, and banks will either lower your credit limit or close your accounts. I went to consolidation program, and my credit card was closed by the issuer, and it will impact your score because you have 30days late, but if you have a 750-800+ score then a few more points will not hurt that bad. But if you have 600 score then minus some points its not looking good. After all, it takes sometime to build it again.