Consolidating debts may temporarily reduce your credit score, but your score will improve over time as long as you make payments on schedule. You can minimize the impact on your credit through strategies like keeping credit lines open and avoiding new debts.

The minimum credit score needed to secure a debt consolidation loan ranges from 580 to the mid-600s, depending on the lender. The best terms and rates go to borrowers with scores that are around 700 or higher.

The decision of whether or not to get a consolidation loan ultimately depends on your financial situation and goals. Here are some situations where it can make sense, even if you have bad credit: You're prequalified for a lower interest rate than what you're currently paying. You have a plan to avoid adding new debt.

Four types of debt are commonly consolidated: credit card debt, student loan debt, medical debt and high-interest personal loan debt. You may reduce the overall cost of repayment by securing better terms and interest. You'll also have a single payment to keep track of instead of several.