Debt Consolidation

A debt consolidation loan is a loan that helps you pay off all your pending debts: unpaid loans or credit card debt. Multiple debts are combined into one single debt where you get more lenient payoff terms. This debt can be paid off in EMIs through a debt consolidation loan. In the long term, if you pay your EMIs on time, your credit score will eventually increase.

Consolidating all your debt into one loan can be helpful for you to pay off all your debt slowly in one EMI plan. But this can also decrease your credit score as taking up credit will raise a hard inquiry, which will bring down your score by a few points. Having a new credit account is considered as a new risk, and this causes a temporary dip in your credit score.