This seems to be a better choice than debt settlement, and it may make payments easier.

Debt consolidation allows people to pay one bill a month towards their debt obligation, rather than many, and it may also give them a lower interest rate payment.

A debt consolidation company or bank can settle the outstanding debts of the individual; this settlement amount plus fees becomes the principal loan amount or a new loan, which will probably be designed to have lower payments than the individual was paying before consolidation.

Then the person would have one loan payment to pay attention to, and a potentially lower rate. Consolidation doesn’t affect a credit score quite as badly as debt settlement and other debt relief options.

Of course, if you can somehow manage to pay your debts off a little at a time, without consolidating, this is slightly better for your credit score.

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