Debt Consolidation Calculator

Debt consolidation combines multiple debts (credit cards, personal loans, medical bills) into a single loan with one monthly payment, ideally at a lower interest rate. You take out a new loan equal to your total debt, use it to pay off all existing balances, then repay the single new loan. This simplifies your finances and can save money if the new rate is meaningfully lower than your current average rate.

Short-term, consolidation may cause a small dip (5–10 points) from the hard inquiry and new account. However, it often helps your score over time by reducing credit utilization (if you pay off credit cards), simplifying payments (fewer chances of missing a due date), and adding a positive installment loan to your credit mix. The key is to not run up new balances on the cards you just paid off.

No. Debt consolidation pays off your debts in full with a new loan — it does not reduce the amount owed. Debt settlement involves negotiating with creditors to accept less than the full balance, which severely damages your credit and may trigger tax liability on forgiven debt. Consolidation is generally the safer and more credit-friendly approach.