How to Consolidate Debt Without Hurting Your Credit Score

The Australian economy is in a state of flux. Many Australians are facing crippling debt and worry about how they are going to pay it off. It’s an intimidating situation, but debt consolidation could be the solution you need to bring some order back into your finances. When done right, it can save you money, as well as allow you to pay off your debts in a more efficient and timely manner – without further damaging your already poor credit score.

What is Debt Consolidation?

Debt consolidation is the act of combining all of your multiple debts into a single loan with a single monthly payment. This is preferable as opposed to making multiple monthly payments to multiple lenders. The aim is to reduce the amount of interest and fees you pay each month, which can help you become debt-free much faster.

Pros and Cons of Debt Consolidation

Like all debt solutions, debt consolidation has both pros and cons that should be carefully weighed before making a decision.


  • Lower interest rate: Interest rates on debt consolidation loans tend to be lower than those of other loans, allowing you to save money by paying less interest each month. 
  • Easier payments: Choosing debt consolidation means that you will only be making one monthly loan payment instead of multiple payments to multiple lenders. This can make budgeting and payment tracking much simpler. 
  • Improves Credit Score: Paying off your debts in a timely manner is one of the keys to improving your credit score. Because debt consolidation can help you pay off your debts sooner, it can help boost your credit score as well.


The main drawback of debt consolidation is that it may not be the best option for all types of debt. If you have high-interest debts such as credit cards, then consolidating them may be the best choice. However, if you have secured debts such as a home loan, then debt consolidation may not be the best choice.

How to Consolidate without Hurting Your Credit Score

When considering debt consolidation, it’s important to understand how it can potentially affect your credit score. While debt consolidation has the potential to improve your score if you make consistent, on-time payments, it can also hurt your score if you don’t.

There are several steps you should take when consolidating debt in order to protect your credit:

Shop Around

As with any financial product, it pays to shop around. Make sure to compare a few different consolidation loans to make sure you’re getting the best deal possible.

Know Your Credit

Your credit score is an important indicator of your creditworthiness. Before applying for debt consolidation, make sure to review your credit report and understand your current score.

Choose Wisely

Not all debt consolidation loans are created equal. Take careful consideration before selecting your loan, and shop around to find the best terms and conditions available.

Take Control

Make sure to take control of your finances once you’ve taken out a debt consolidation loan. Make on-time payments, and pay back the loan as quickly as possible to protect your credit score.

Debt consolidation can be a great way to get your finances in order and improve your credit score. At Peel Finance Brokers, we offer a wide range of debt consolidation loans and services to help you get out of debt faster and with minimal damage to your credit score. Contact us today to find out how we can help you.

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