Will Debt Consolidation on Credit Cards Hurt Credit Score?

[praise123]

So, I recently got the debt consolidation personal loan to pay off credit cards.  They are now done until I get my house.  I had $11,000 in Credit Card debt, and I am sleeping better at night knowing that I am making one payment and my cards are all at zero.  Credit Union gave me the loan at a great rate, but I am now concerned about how this will affect my score.  I have learned my lesson and will not use those cards again.  I understand the habits that created the problem and will not travel down that road ever again. 

What kind of lowering score can I expect to my score?  Will this improve in about 6 months? 

[user5387]

If you pay off credit cards by means of an installment loan, you should expect to see higher scores.  This has to do with the way that revolving and installment loans are treated for scoring purposes.

Of course, there are things that can go wrong, like running up the cards again.

[Startome]

I agree with the above post in that scores will be up, the harder part is remembering what you've learned a year or two down the road =)

[Creditaddict]

+2 If you zeroed out ALL Credit Cards and just have the 1 installment now your score will go UP through the roof!!

CONGRATS

[patrick00032001]

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All posts have been great advice! Also, let one of your cards report a small balance each month, as when I paid all my revolving trades to $0, I would notice a slight 10-15 point drop with all scores, FICO like to see some activity on your revolving credit lines!

[youngandcreditwrthy]

Are you all sure a new installment loan wont, at least temporarily, drop the op's score?

[SnackTrader]

Well, it adds a new account, which lowers AAoA, and my understanding is there is a small effect from utilization on installment debt in some scoring models. But, that is likely less harmful than the significant utilization of revolving debt. Also, utilization goes down much quicker on installment debt.

I would say the OP is better in the long run, but isn't quite at "optimal" score levels. OP likely has a better score than a month so, but will have even better scores in time.

[youngandcreditwrthy]

That's what I thought.
To assess the impact on your finances, however, the interest rates would need to be known.
If you go from paying 10% on a cc to 15% on a personal loan.. Not saving any money.
Otoh, if you go from 20+% to 10%, that's good :-)