Does debt consolidation affect your credit? - need credit expert!

Does debt consolidation affect your credit? I have previously posted on Find Some Money forum on credit questions and have received excellent answers. I am thinking about paying off my credit cards in full but was thinking about consolidating the debt instead. I heard that consolidating debt may have a positive effect on your credit score. As I want to get a mortgage in the near future I was wondering if I should consolidate my debt if it affects my credit score positively. Look forward to some clarification.

I've worked with a lot of clients to help them with their credit and I can say that debt consolidation does effect your debt. Suppose you have 3 credit cards and you consolidate the debt your credit score will rise because you have three settled account but will also decline as well because you've applied for a consolidation loan. The effects depend on a lot of variables. If you have 2 credit cards with small balances and you take out a consolidation loan this will effect your credit score negatively because the positive effect will be less than the negative effect. If you have 10 credit card balances near their respective limit and you take out a consolidation loan then the positive effects (10 Fully Settled Accounts) will be greater than the negative effect (applying for a consolidation loan).

If I was you I would pay the balance off in full and have confirmed settled accounts in your credit report. I mortgage company will love to see settled accounts rather than settled accounts and a consolidation loan if that makes sense.

Thanks for the clarification Quentin, it makes perfect sense now. I guess debt consolidation does affect your credit score. I will settle my credit account and check my credit file to see if my score is good enough to apply for a mortgage. Thanks again!!!!