If you are not familiar with what a debt consolidation loan entails, this is a loan where the amount of debt you owe is negotiated down and the issuer of the consolidation loan pays the balance off in full.
So, instead of paying three very high sources of debt you will have to pay a more reasonable single debt.
But, there is a facet to this consolidation process some may not be aware of: taking part in a debt consolidation program will affect credit scores.
This is because you will not have paid all of your debts and essentially will have admitted to not being able to pay what you owe.
However, there is a proverbial bright side to this process.
Namely, through the use of a debt consolidation loan, you will save significant amounts of money on interest payments.
Also, you will be able to get out of debt much easier.
Furthermore, if you always stay on top of your monthly payments, you will slowly repair the lowered credit rating.
As such, the "hit" that your credit score takes on a consolidation plan will be worth it when all is said and done.
Yet, there will be those that will look down upon handling your debts in such a manner.
Such individuals are most definitely entitled to their opinion.
Different individuals will weigh the impact on their credit score in different manners.
However, it is safe to say that if you are reaching the point where you are seriously considering a debt consolidation loan, then you credit score is probably already impacted.
So, really, what would be the negative consequence of taking part in a loan offer that would help you get back on your feet financially?