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Debt Consolidation

Can Debt Consolidation Improve Your Credit Score?

Written by Lauren Hamer, CFEI®
Senior Content Writer
December 10, 2025 | 7 min read
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You’ve worked hard to build wealth using consistency and smart decisions—and your strong credit reflects it. However, many overlook the fact that having good credit is just the beginning. Strategic debt consolidation for high credit-score borrowers can help you optimize your financial profile even further, strengthening your score while simplifying how you manage debt.

Whether you’re preparing for a major investment, streamlining high-interest accounts, or simply ready to fine-tune your credit health, consolidation can be a smart next step. Here’s how to use consolidation to unlock even greater possibilities.

You’ve built strong credit—here’s how to make it work even harder

 

Why high earners still carry debt

Even with strong credit and stable income, many six-figure earners carry multiple balances across credit cards, personal loans, or business-related expenses. That’s not necessarily a problem—using revolving credit strategically can be a smart way to cover personal expenses, home improvements, or free up cash flow for investment opportunities.

But juggling multiple high-interest balances comes at a cost. Those accounts often carry variable rates, complex due dates, and utilization ratios that can hold your score back. And if you miss a payment, or carry a balance month to month, 20%+ APRs can undermine even the strongest credit profile.

 

Great credit doesn’t mean you’re fully optimized

Having excellent credit puts you ahead, but there’s still an opportunity to fine-tune. Consolidation helps lower revolving balances, simplify payments, and strengthen your overall profile. This is especially important if you’re planning a large financing move or major investment.

Lenders often reward creditworthy borrowers with a balanced, low-risk profile. The more disciplined and predictable your credit behavior appears, the stronger your negotiating position becomes.

 

Debt consolidation can position you for better terms on new and existing debt

Even with an excellent credit score, consolidation of debt can increase your score further by 40 to 50 points within 1 month of the consolidation. It’s a smart move to make if you will soon be seeking credit for a new car, new property, or student expenses, as it can potentially save thousands of dollars.

With an improved credit score after consolidating, borrowers should also explore taking advantage and refinancing any debts they did not consolidate. Consolidation can be used to kick off a positive domino effect, resulting in better terms across all of your existing debts.

3 ways debt consolidation can improve a strong credit score

 

1. Lowers your credit utilization ratio

One of the fastest ways consolidation can impact your score is by reducing credit utilization—the percentage of revolving credit you’re currently using.

FICO reports that utilization accounts for roughly 30% of your total score, and reporting agencies generally favor those who limit the amount of credit they’re using to less than 30% of their total available credit. However, many professionals exceed that threshold by charging large expenses to credit cards, even if they pay consistently.

When you move that revolving debt into a fixed-rate personal loan, your utilization on those cards drops immediately, improving your score and eliminating unpredictable interest charges.

 

Example:
If you have $40,000 across several cards with $50,000 in available credit, your utilization sits at 80%. Consolidating that into a personal loan drops your revolving utilization to nearly zero—often resulting in a measurable credit score boost within a few reporting cycles, as long as you don’t carry new balances on the cards after paying them off.

 

2. Creates a more predictable payment history

Your payment history makes up the largest portion of your FICO score—about 35%. That means even one missed or late payment can hurt your profile.

Consolidating your balances into one fixed monthly payment helps minimize that risk. With fewer due dates to track and one predictable payment schedule, you can better ensure consistent on-time payments while also reinforcing the strongest signal of creditworthiness.

 

3. Diversifies your credit mix

Credit scoring models also look at your credit mix, which refers to the variety of credit types you manage. Most high earners have heavy exposure to revolving credit through multiple personal cards and lines of credit.

Adding an installment loan, like a personal loan for debt consolidation, adds healthy diversification to your profile, which may slightly improve your score over time.

When debt consolidation makes sense for high earners with good credit

 

You’re managing debt, but paying a premium in interest

Professionals often carry large balances intentionally—but if those balances are on high-interest credit lines, they may be costing you more than is necessary.

According to the Federal Reserve, the average APR on all credit card accounts recently reached 21.16% and premium rewards cards often exceed that.

Take a look at your current APRs. If your balances are getting harder to manage, or your card rates are above average, it may be worth trying to lower it. Consolidating them into a fixed-rate personal loan can reduce interest costs and redirect more money toward your goals.

 

Read more:
How Do You Get the Credit Card Company to Lower Your Interest Rate?

 

You’re planning a large financial move

Debt consolidation can clean up your credit profile before applying for a mortgage or major investment (lower utilization and simplified finances). It can also free up cash flow, allowing you to allocate funds toward down payments, everyday expenses, or investment contributions without straining liquidity.

 

You value efficiency and simplicity in your finances

For those managing demanding careers and family obligations, one fixed monthly payment can reduce stress and minimize mistakes. A consolidated structure not only saves time but also brings clarity—making it easier to plan, automate, and stay in control of your broader financial strategy.

Why BHG’s personal loan is the strategic choice for high performers 

 

Designed for high-income earners with strong credit

Unlike traditional lenders that rely solely on a credit score, BHG Financial takes a more holistic approach—evaluating your professional credentials, income history, and financial stability. This means your success and earning potential count toward your approval and loan terms.

 

Large loan amounts for meaningful consolidation

With personal loan amounts up to $250,0001 and terms up to 10 years,1,2 BHG allows you to consolidate multiple accounts—credit cards, personal loans, or lines of credit—into a single, predictable payment.

For example, consolidating $50,000 across several accounts can lower your total monthly payments by 42% and extend your repayment timeline. This helps you maintain liquidity while systematically paying down your balance.

 

Fast, confidential, credit-safe application process

BHG’s prequalification process takes minutes and has no impact on your credit score.3 You’ll receive a personalized offer tailored to your financial profile, supported by U.S.-based lending specialists who understand the demands of high-earning professionals.

From application to funding in as few as five days,4 the process is streamlined for speed, security, and discretion.

Beyond the score: Other benefits of strategic debt consolidation 

 

More liquidity, more options

Reducing your high-interest payments can immediately improve cash flow. That freed-up capital can be reallocated toward strategic goals—such as investing, expanding your business, or optimizing tax planning.

Consolidation also helps preserve flexibility, ensuring your cash is available when opportunities arise.

 

Future-proofing your financial profile

A stronger score positions you for better rates, more leverage, and higher loan limits in the future.

 

Consider this example:
The difference between a “good” credit tier and an “excellent” one could mean qualifying for an 11% APR instead of 14%. On a $100,000 loan over seven years, you could save more than $13,500 in interest.

Loan amount

APR

Monthly payment

Total interest

$100,000

11%

$1,712

$43,828

$100,000

14%

$1,874

$57,416

 

Peace of mind during unpredictable markets

Lenders tend to tighten their requirements in times of economic uncertainty, which can make it harder for even qualified borrowers to secure favorable terms. Streamlining your credit profile through consolidation can strengthen your approval odds with lenders, giving you more options and stability regardless of market conditions.

Key questions for high earners considering consolidation

Before deciding whether to consolidate, it helps to take a step back and look at the bigger picture of your financial goals and obligations.

  • Are you using credit strategically—but paying more than you should? Even when debt supports growth, it still pays to minimize cost. Lowering your interest rate can translate into thousands in long-term savings.
  • Would a simplified credit profile support your next big move? Consider upcoming opportunities and whether you have your preferred cash flow and credit readiness. A consolidated profile can improve your approval odds and borrowing power.
  • Do you have the credit strength to qualify for the best terms? If so, you’re in a strong position to act now before rates fluctuate or balances increase. Your excellent credit gives you access to premium loan structures designed for high-income earners like you.

Final thought: Use consolidation to strengthen what you’ve already built 

Consolidating debt can help turn strong credit into even greater financial flexibility. Whether you’re planning a large purchase or simply want more control over your cash flow, streamlining balances can strengthen your overall credit health and expand what’s possible with your next major financial move.

Already have great credit? Use it strategically. See how a BHG personal loan can consolidate your debt and strengthen your profile—with no impact on your credit score.3

 

See your offer real fast

Just a few easy steps to get prequalified!

* Advertised rates are subject to change without notice. Monthly payment is a representative example and for illustrative purposes only. BHG monthly payment based on BHG’s minimum available APR of 14.63% as of 11/21/25 and includes an origination fee. Your actual loan size, loan term, and monthly payment amount may vary based on your individual credit profile and other information provided in your loan application. Terms subject to credit approval.

 

Not all solutions, loan amounts, rates or terms are available in all states.

1 Terms subject to credit approval upon completion of an application. Loan sizes, interest rates, and loan terms vary based on the applicant's credit profile.

2 Personal Loan Repayment Example: A $59,755 personal loan with a 7-year term and an APR of 17.2% would require 84 monthly payments of $1,228.

3  There is no impact on your credit for applying. For personal loans, a complete credit history, which will appear as an inquiry on your credit report, will be performed upon acceptance and funding of the loan and may impact your credit.

4 This is not a guaranteed offer of credit and is subject to credit approval. 

Consumer loans funded by Pinnacle Bank, a Tennessee bank, or County Bank. Equal Housing Lenders. 

For California Residents: BHG Financial loans made or arranged pursuant to California Financing Law license - Number 603G493.

 

 

 

If you’re feeling weighed down by credit card debt, you’re not alone. High interest rates can feel like an uphill battle, making it easy to fall behind and tough to catch up. 

Understanding how to pay off credit card debt is the first step toward taking control of your debt and reclaiming your financial well-being. Here are a few practical strategies to eliminate credit card debt.

 

Key considerations

  • If you have a significant amount of high-interest debt and a good credit score, a debt consolidation loan can be a viable option for paying off credit card debt. For smaller debts, a balance transfer card could help you tackle debt faster.
  • If not consolidating or using a balance transfer card, set a goal and a budget for repayment; targeting one debt at a time using the snowball or avalanche method can help reduce your balances methodically.
  • Gradually exceed monthly minimum payments whenever possible to decrease your total interest over time. Even small extra payments can make a big difference in your credit card debt over the long term.

 

Why is credit card debt hard to pay off?

U.S. credit card balances have surpassed $1.21 trillion, according to the Federal Reserve, driven partially by high APRs.

Credit card debt is difficult to overcome. Even if you don’t make additional purchases, the interest compounds. Only paying the minimum each month means you will carry the debt from month to month, increasing your debt as you accumulate interest charges.

For example, if you’ve amassed $50,000 in credit card debt on a card with a 23% APR, you could pay up to $11,500 per year in interest. Without a plan in place to address the debt proactively, it can become a significant burden. 

To start, pay as much as you can toward the debt. Some common ways to do this effectively and consistently include using the debt snowball or debt avalanche method. 

 

What is the debt snowball method?

If you have balances on multiple cards, one of the best strategies to eliminate credit card debt is the snowball method. With the debt snowball method, you pay off the card with the smallest balance first before moving on to the next largest one.

This method is a good choice if you can’t afford to make large monthly payments but want to proactively chip away at your debt. Once you pay off a card, you'll redirect the funds you were using for that payment to your next card balance. You'll continue to do this until you’ve tackled each debt.

Here’s how it looks in action, using the following credit card balances as an example:
 

  • Credit card 1: A $5,500 balance and an APR of 16%
  • Credit card 2: A $2,000 balance and an APR of 20%
  • Credit card 3: A $10,000 balance and an APR of 23%

 

Using the snowball method, you’d focus on the second card on this list first because it has the lowest balance ($2,000). Once cleared, you’d move on to the next highest card balance ($5,500) before addressing the third card with a $10,000 balance. 

Remember to make minimum payments on all other cards in the meantime; missing any minimum payment can hurt your credit score.

 

What is the debt avalanche method?

Attacking debt using the debt avalanche method involves paying off the account with the highest interest rate first, regardless of the balance. It can take a while to make progress on —especially if the balance on that card is excessive—but you’ll save money on interest in the long run. 

The avalanche method may be a better strategy for you if you can confidently afford a bigger payment and want to pay less in interest while you work to become debt-free. 

Here’s how debt avalanche looks in action, using the same credit card balances from above as an example:
 

  • Credit card 1: A $5,500 balance and an APR of 16%
  • Credit card 2: A $2,000 balance and an APR of 20%
  • Credit card 3: A $10,000 balance and an APR of 23%

 

Using the avalanche method, you’d tackle the third card first because it has the highest APR (23%). You’d focus on the second card next—APR of 20%—even though it has a lower balance, before moving on to the first card with the lowest APR. 

Again, it’s important to focus on making every payment on time to protect your credit score and avoid tacking on additional late fees. It can take a while to knock out the first debt, so patience and consistency is key.

 

How can debt consolidation help? 

Consolidating personal credit card debt FAQs

Consolidating personal credit card debt can simplify your finances by combining multiple debts into a single monthly payment with more manageable interest rates. In the long run, this can save you from spending more money than you anticipated or previously agreed to on in-terest payments in the future.

Personal debt consolidation can impact your credit score differently depending on the method chosen. For example, applying for a new loan or credit card for consolidation may result in a temporary dip in your credit score due to inquiries, changes in credit utilization, and your his-tory using credit-based financial products. However, making timely payments on the consoli-dated debt can positively affect your credit score by demonstrating responsible financial man-agement.**

Yes, personal debt consolidation can be applied to various types of debt, including personal loans, medical bills, and student loans, in addition to credit card debt. Consolidating multiple debts into a single payment can streamline your repayment process and make it easier to man-age your finances overall.

With highly specialized financing options for accomplished professionals, BHG Financial offers personal loans up to $200K1 to use as you need them. With repayment terms that last up to 10 years,1,2 you can fully bring your financial plan to action by consolidating your personal debts into a simple and affordable monthly payment to help you achieve financial peace of mind sooner rather than later.

Our payment estimator can help you see your personalized estimate quickly, and our dedicated concierge service team can serve your needs every step of the way.

 

Debt consolidation involves combining multiple credit card debts into one new account or loan and using it to pay off your existing debts. In many cases, consolidation can save you money because the new product may come with a lower interest rate than the ones attached to your cards. Consolidating debt also simplifies the repayment process because you only need to manage one monthly payment.

Some of the most effective credit card consolidation strategies include using a debt consolidation loan or a balance transfer credit card. The best way to pay off credit card debt will depend on the amount of debt you have, your credit history, and your income level.

If you have a significant amount of high-interest debt and a respectable credit score, a lower-rate personal loan for debt consolidation can be a viable option. Debt consolidation loans, like the ones offered by BHG Financial, have flexible repayment terms1 that help keep your monthly payments low.

 

Do balance transfers help pay off debt faster?

Transferring your balance from one credit card to another can help you pay your debt faster, as long as the new card comes with a lower rate. If you transfer your balances to a new card with a lower APR, you can allocate a greater portion of your future payments to paying down the principal instead of the interest.

That said, there are a few things to know about the timing of balance transfer credit cards:

  • You can apply for a balance transfer card in a matter of minutes, but the actual transfer can take anywhere from a few days to several weeks, depending on the credit card company. During that time, you’ll still have to make any payments you owe to your original card company.
  • Make sure you understand how long the introductory rate lasts, whether there’s a transfer fee, and what the regular rate will be after the promotional period. Introductory rates typically run for a period of six to 18 months, and if you can’t pay off your balance in full, the new rate may be higher than the rate on your old card. 

If you worry it may take longer than the intro period to pay off your debt, consider transferring your balance to a debt consolidation loan. BHG offers fixed, affordable payments with terms up to 10 years.1,2 Plus, dedicated loan specialists provide a concierge loan experience, guiding you through the loan process. 

 

 

Balance transfer vs personal loan chart


Source: Bankrate, Investopedia - Accessed on 3/14/25
1 Terms subject to credit approval upon completion of an application. Loan sizes, interest rates, and loan terms vary based on the applicant's credit profile.

 

How to pay off credit card debt FAQ

 

Should I pay off my credit card debt or save first?

It usually makes sense to pay off your debts before saving money, especially if you have high-interest debt. This is because the high interest rates on your accounts will often cost more than the money you can save. For this reason, any money you can afford to save is better allocated to paying off your high-interest debt so that it doesn’t continue to compound. 

 

How can negotiating with creditors reduce my debt?

If card issuers are willing to consider negotiating your credit card debt, you may be able to set up a payment plan, pay off the cards for less than what you owe, or agree to a forbearance. However, there are definite drawbacks to negotiation, as these solutions negatively impact your credit score.

 

Can I pay off credit card debt without hurting my credit score?

Absolutely! Any moves you make to pay your monthly balances on time can help build a solid payment history and, in turn, improve your credit score. Plus, reducing your credit card balances will lower your credit utilization ratio.

 

Are debt relief programs worth it?

Debt relief (debt settlement) programs offered by for-profit companies should be viewed as a last resort, and only after you’ve exhausted options for consolidation. Debt relief companies can fast-track getting out of debt, but they often charge high upfront fees, and the process could hurt your credit score. Watch for scams and make sure you understand the potential fees before handing over your finances to a debt relief company.

 

What if I can't afford minimum payments?

Many creditors are willing to work with you if you cannot afford to pay the monthly minimum payment. Call the company as soon as possible to see what you can work out. If getting a debt consolidation loan isn’t an option for securing a lower minimum payment, you can contact a credit counseling agency, which will help you organize a debt management plan to pay down your debts. Debt relief programs could be considered as a last resort, as they come with drawbacks and can charge exorbitant upfront fees.

 

How BHG can help you pay off debt faster

At BHG Financial, we believe financing should fit seamlessly into your life and goals. That’s why we offer personal loans tailored to your needs, with amounts up to $200,0001 and flexible terms of up to 10 years.1,2 Consolidate your high-interest debt with a BHG loan designed to help you move forward confidently. 
 
Plus, you’ll enjoy dedicated, U.S.-based concierge service that works around your schedule—because your time is valuable. Ready to see what’s possible? Use our quick and easy payment estimator to get your personalized loan estimate in just seconds.