Debt consolidation programs are offered everywhere. You may see ads on billboards or commercials on television promising to eliminate your debt. The services attract people who have been unable to pay their bills and may be getting hounded by bill collectors and late fees are piling up.

There are several different types of debt consolidation and each will have different affects on your credit score. The programs and services are not illegal but they can create problems for your credit if you are not careful about which services you use.

If you have fallen way behind on your bills and are unable to catch up your credit may already be going downhill. These are the people that use the debt consolidation management programs. These programs are designed to get you out of debt quick. You will have an account agent who will negotiate with the people you owe and convince them to take less than the amount owed as a payoff. You will save hundreds and maybe thousands of dollars by doing this and since your credit was already in bad shape it will not matter much to you that your credit score will decrease.

If you are trying to clean up your debt to income ratio or relieve yourself of un-needed high interest rate for the sake of repairing your credit history or raising your credit score you will want to shy away from the debt consolidation management programs.

Those who are looking to create better credit and want to consolidate high interest bills into one low interest payment should consider the debt consolidation loan. With a debt consolidation loan you will be given a lower interest rate than what you may already have for your credit cards or other unsecured loans. The loan is designed to pay the other debt and leave you with one payment. If you allow the lower interest loan to absorb the higher interest debt you will be able to save thousands in interest over the lifetime of the loan.

Debt consolidation has been considered risky business and many people have gave it a bad name. The truth is it is a helpful and very needed service for many people in this world and without it their credit would be ruined forever.

It really depends on your financial situation as to which debt consolidation method you use. For those who are trying to obtain a mortgage or are trying to get out from under high interest credit card debt the debt consolidation loan is the only way to go. Any other type of debt consolidation will leave a negative mark on your credit as well as lower your credit score.

The debt consolidation loan will have no negative effect on your credit and could raise your credit score. You are paying back your debt 100% and remaining in good standings with your creditors. You can close the accounts you paid off in full or leave them open to not risk shortening your credit history length.