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    • You can use debt consolidation to improve your credit score, but you must be disciplined about it, or it can put you in a worse position. The benefit of consolidating your debts is: 1) It eliminates multiple payments (to several creditors) and often results in a lower monthly payment, which improves your cash flow, and thus your credit rating. 2) It zeroes the current balance in some of your accounts, which means you have unused credit with those lenders, which also adds to your credit score.The dangers, of course, are that with more cash available (due to lower payments) and those unused credit potentials, you might be tempted to spend more, and thus get yourself in deeper trouble than you were in before.If the temptations are greater than the rating rewards for debt consolidation, a better approach might be to simply pay off those debts. The first step is to pay more than the required minimum payments maybe double would be a good idea and make it a rule to send the payment immediately when you receive the bill. And even more important is to put away the credit cards for a while. Try a week each month with no charging of anything. Give yourself a pocket money budget, and pay cash only. When your pocket money is gone, wait until your next budget period to buy anything more. By establishing these rules for yourself, you’ll be giving conscious attention to your credit situation it’ll keep you focused on your long-term intent to clear your debt and improves your credit rating.You want to set a final goal of getting to a point where you still use your credit cards for the convenience of a single billing per month, but then when you receive the bill, you pay it in full! When you’re not carrying debt from one month to the next, there are no finance charges to pay. You’ll have more to spend in the long run, and you’ll feel better about yourself.

      • Thank you for your comments. You made good and valid points. The point of my article is those promoting the service of debt consolidation are actually attempting to enroll people into Debt Management Program (DMP) with the offer of reducing one’s debts through negotiation with the creditors. DMP programs destroy peoples credit profile immediately and will not be healed for some time (7-years) after the last payment is made. Establishing positive new credit during the process can reduce the impact and time it take to bring your scores back up.

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