Consider the difference between truth and fiction when thinking about moving your debt to a single location. Considering the downturn in the current national financial situation, many individuals are looking for a way to reduce their own debt load. There are solid, established ways to accomplish this goals, and others which prey upon desires and insecurities.

Growing increasingly common are credit consolidation companies, which are often confused with credit repair companies. These businesses offer to pay off your current creditors, and you then pay this company a smaller amount than what you were currently paying the other creditors. While this arrangement sounds great, a simple Google search will show hundreds of horror stories about victims who paid the credit debt consolidation company for their services, only to find out later that their original debts were never paid off.

Another pitfall to credit consolidation companies is that some report to the credit bureaus as credit counseling, which in the eyes of a lender count exactly as a COLLECTION. As you know, having a collection on your credit report can disqualify you from certain types of financing, especially mortgage financing.

There are legitimate ways to consolidate credit debt. For example, this can be done through refinancing where you receive cash or through a home equity line of credit. It's also possible to open another line of credit, such as through a credit card offering a balance transfer option, and then transfer all of your debt over to this line. By using one of these methods, you can increase your credit score and even enjoy a lower interest rate for awhile.

One way in which you can increase your credit score is by only having one account with a balance instead of several. However, one must choose carefully, because the account where you consolidate your debt will be potentially maxed out, which will lower your score in the beginning. This also should not be used as a way to pay off several credit cards, only to go spending on these cards once more. Instead, it is better to cut up the empty cards after consolidating in order to avoid even more financial trouble.

There are many ways to manage your personal debt. You should talk to a bank or mortgage broker for more information or advice. They will listen to you and help you devise a plan to keep you from suffering collection, bankruptcy, or foreclosure by making manageable payments on your debt. Debt consolidation can be a literal life saver for many debtors.