Planning to consolidate your debt? You might be worried about what consolidation could do to your credit score. It’s common for many people to see their credit scores decline when they consolidate debt, at least in the beginning. As you pay down debt and reduce spending, you’ll probably see your score begin to climb.

Watching your score slowly increase and worrying that it might drop again is frustrating. Help yourself avoid some of the credit woes that go with debt consolidation by making these smart credit moves.


After paying off some of your debt, you might be tempted to close accounts that have a zero balance. You’ve finally gotten rid of that debt, so why would you want to keep the account around?

Surprisingly, closing your old credit cards or loan accounts could cause your credit score to fall. This happens because the length of your credit history is important to your score. A longer credit history indicates to lenders you have experience borrowing and repaying debt. This is shown on the report based on accounts that are open.

It’s usually better to keep your accounts open, even if you’re not using them. In order to improve your credit score when consolidating debt, an open account with zero balance can have a positive effect on your credit score.

The exception to this tip is if you’ve consolidated credit cards that have an annual fee or if you are unable to curb your spending. Credit cards that charge an annual fee will almost always still charge you the fee regardless of if you’ve used the card or not. The positive effects to your credit score may not make up for the money you’re losing.

Additionally, if having a credit card or other account with a zero balance makes you want to start spending, it might be better to close the account. You could potentially avoid overspending by eliminating payment methods.


Credit utilization is the amount of credit you’re currently using versus the amount of your credit limit. The closer you get to maxing out your available credit, the riskier you look to lenders. Having more available credit generally shows that you’re responsible with your credit usage and spending habits.

Credit usage is a huge factor in your credit score. It’s generally recommended that you use no more than 30% of your credit limit across accounts. The more you can keep your balances below that rate, the more likely you’ll see your score go up.


Applying to new loans, credit cards, and other credit accounts all at once could quickly drop your score. When you apply for a new account, lenders will make what’s known as a hard inquiry on your report. This inquiry can drop your score temporarily. Generally, a hard inquiry disappears from your report after about 24 months.

Since hard inquiries expire, applying for one account may not have a huge effect on your score. Applying to multiple credit accounts at once, however, can drop your score by quite a bit. It’s best to avoid applying for any new credit when you’re in a debt consolidation program. If you absolutely must apply for credit, make sure you look into your chances of approval before actually applying.


Monitoring your credit report helps you potentially catch unauthorized accounts or identity theft. If you notice a strange account or application on your report, you can take measures to report fraud. It’s usually much easier to stop fraud by catching it early than it is to repair your credit after extensive fraudulent activity.

Checking your score may also help improve your credit score when consolidating debt by allowing you to make changes in the way you’re managing debt. You should compare your score with past scores to see if it is moving up or down. If it’s improving, you know you’re on the right track and should keep doing what you’re doing. If you see it decreasing, it may be time to make changes to your credit and debt habits.


A frustrating aspect of increasing your credit score is the time it takes. Unfortunately, credit scores usually take several months to years to see a significant improvement. Being patient is an important part of building a good credit score.

As you try to improve your credit score, focus on making your consolidated monthly payment so you have a better chance of successfully completing your debt relief program.  You can utilize these tips to help improve your credit score.If you’re considering consolidating your debts with a debt relief program, you probably have a lot of questions. The Accredited Debt Relief Team is here to help answer those questions and give you professional advice on debt relief. Get a free consultation today to learn more.