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When you contact a debt consolidation service, more than likely you are already in financial trouble. You are probably already behind in payments, possibly even heading into collections with some creditors. You are hoping this service will be able to negotiate some kind of deal or offer you a way to pay down your bills and make things right again.

You may have also heard about your credit score being adversely affected. The whole reason for consolidating your bills is to salvage your credit. Will taking part in a program like this cause your credit score to drop?

The short answer is no, not on its own. Paying off your debts does not, in itself, look bad or scar your record. In fact, your score will actually increase if you make all your payments in a timely manner for a few years.

Nevertheless, there are subtle details that may actually reduce your credit score. These have nothing to do with the actual consolidation service, though.

You need to keep in mind that your credit history won't disappear. Just because you finally paid off your credit card debt with the new loan does not mean that all the associated late or missed payments will vanish. They will stay and continue to be reflected in your score.

Another technical point is that paying off your credit cards and closing the accounts will reduce your available credit line. The credit scoring system takes your outstanding debt (the consolidation loan you just took out) and rates it as a percentage of your available credit (your credit card limits). This means if you cancel your cards and reduce your credit limit, you are going to appear to have accumulated more debt, as a percentage, than you really did. This will drop your credit score.

These points are really irrelevant, though, if you are in serious financial trouble. The benefits of using a debt consolidation service far outweigh the short-term credit score losses you can suffer.

Finally, by researching and then comparing several debit consolidation agencies, consumers will be able to identify the agency that meet your specific financial situation, plus the cheapest interest rate the market is offering. Nonetheless, it is recommendable working with a seasoned and reliable debit counselor before even make any decision, this way you will save time through seasoned advise & cash by getting better results in a shorter period of time.

Hector Milla is editor of the Free Debt Consolidation Quotes website – where you can see his top rated debit consolidation service recommendation.

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Tags: Debt, debt consolidation, debt relief, debts