Consolidating your loan affects your credit because you’re usually applying for a new loan to consolidate debt. An inquiry goes on your credit report and your average age of debt, which makes up 15% of your credit score, is reduced.

However, if you repay the loan responsibly, your credit could improve in the long run since you can reduce your credit utilization rate by repaying your cards, and you’ll have a new type of debt on your credit record — the installment loan used to consolidate your debt.