The first advice I give to all clients is don't worry about your credit rating. Credit is a tool that turns you into a debtor the sooner you get away the better. The video on this hub is long but says it the best.

That said, let us get down to the nitty gritty. First a disclaimer, I do hate this but do to a certain unscrupulous industry most of what I am about to say cannot be 100 percent accurate as the actual formula they use is super secret.

Everyone has to realize that often when talking about a credit rating most people get two things confused. There is the FICO score which stand for the Fair Isaac Company. Which is named after the man who invented the algorithm that crunches all the numbers from your consumer file into a tidy little figure. There are a couple others out there like NextGen and the CE Score.

And then there is the credit rating which is assigned from the 3 or 4 credit bureaus out there. The FICO score is used by all three major bureasu as the baseline number but each has their own proprietary way to achieve the final score. The also call the formula something different than FICO, but Fair Isaac supplies them with the number.

The big three all use the VantageScore as well with the FICO number it correlates a letter grade of A-F to help make the decision.

Since this is about money and maximizing bank profits, it takes out all biases based on Race, Sex, Marital Status, Religion, and National Origin. As greed is an equal opportunity blood sucker.

So, does debt consolidation lower or raise your score I can definitely say maybe. It depends on the person and their credit history, their debt to income ratio.

Simply put it boils things down to two deciding factors ability to pay, and willingness to pay. If your score, based on new data shows your ability and willingness has increased upon obtaining your loan, then you can bury yourself deeper into debt.

If your score says your ability or willingness has decreased, then they will still let you bury yourself deeper into debt, just at a higher interest rate, and they will do this until you are buried in debt and have no more ability or willingness to pay your debt.

Now that said there is some confusions as to debt consolidation and Debt settlement. Debt consolidation is where you take all your old debts and take out a new loan adjusting the interest rate or time frame of repayment in order to lower the monthly outlay to the debt service. This usually results in the payment of more interest over time but can give you breathing room in the short term.

Debt Settlement is where you stop paying your debts for longer than six months and once the debt is charged off you negotiate a final settlement payment that clears the debt (Not a payment plan as this reconstitutes a debt). Once done your credit report will change from unpaid collection, to paid for an amount less than full. This forgiveness also counts as income in the year it is settled and is equal to the difference between what is owed and what is payed.

Don't use a service for this please. They promise you good things, take a lot of money from you every month, and make a huge profit at your expense. They are almost as predatory as the collection agents they just come at you in lambskin.

I hope this helped