In fact, to credit agencies, paying off several accounts with the consolidation loan makes it seem as if you have paid off accounts.The debt consolidation loan appears as a new credit account, but accounts paid in full are always positive.
Taking out a new loan to pay off other loans does add one more loan to your credit history, but it also removes the older loans and marks them as paid in full.
In repaying your new debt consolidation loan, it is important to make consistent, on time payments.
This step also positively affects your credit score, but it does take time.
It is very important that you are fully committed to a debt consolidation program.
Closing your credit accounts does have a negative impact on your credit score, even if it is to discourage further spending.
Closing credit card accounts lowers your amount of available credit, thereby changing your debt to limit ratio.