Since a credit score can depend on how many different accounts have outstanding balances, it's possible that debt consolidation can indeed improve your credit score.
Debt consolidation has minimal effect on your credit. In most cases, you apply for a home refinance or debt consolidation loan and use the proceeds to pay your other debts. Although you will now have a single larger debt on your credit report, several small debts will be eliminated.
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Answer:
Debt consolidation itself does not dramatically affect your credit score. However, the main issue with debt consolidation is that over 70% of consumers who consolidate their debts grow it back to the same level or higher according to(http://www.bankrate.com).
1. When you consolidate your debts, you are not learning how to manage your money better, you are performing a quick fixes, and quick fixes breakdown as fast as you put them together
2. You must take the necessary steps to learn how to manage your money by putting together a realistic budget
3. Create a simple to execute and even simpler to manage debt elimination plan
4. Make permanent decisions to change your spending patterns to spend cash for your purchases
Hope that helps
Ahmad Davis
http://www.victory-by-design.com
Read more:
http://wiki.answers.com/Q/How_consolidation_affects_your_credit#ixzz1Yay5SM2C