Business Loans

Tailored commercial financing with amounts up to $500K1,2 and flexible terms of up to 12 years1

Business Loans

Debt consolidation loan

Turn business debts into one fixed and affordable monthly payment

Existing business investment loan

Upgrade and expand your current business to increase your bottom line

New business opportunity loan

Buy into a business or develop passive income opportunities

Working capital loan

Boost your liquidity to finance all of your business needs and initiatives 

Personal Loans

Customized consumer financing with amounts up to $200K1 and flexible terms of up to 10 years1

Personal Loans

Debt consolidation

Turn personal debts into one fixed and affordable monthly payment

Home improvement

Remodel your kitchen and bath, add a pool, or make other upgrades to your space

Other ways to use your funds

Pursue multiple goals with one comprehensive financial solution 

April 4, 2022

Will a debt consolidation loan affect my credit score?

Will debt consolidation affect my loan

debt consolidation loan may affect your credit score negatively at first if the lender you choose performs a hard inquiry, also known as a hard pull of your credit. However, if you pay back your loan promptly without missing any payments, you could build up your score over time.

If a negative impact on your credit score is a concern, consider working with a lender like BHG Money. We don’t perform a hard pull of your credit for our personal loans until the funding stage of the loan process. This means submitting an application will have no impact on your credit score. For our business loans, we don’t perform a hard pull at any point in the loan process, so your credit won’t be affected.

Regarding hard inquiries, when performed, these will appear on your credit history for up to 2 years. But keep this in mind: Lenders will be more likely to be concerned if you have multiple hard inquiries in a short period than just one because this may indicate that you need money fast and may not be able to pay it back.

In any case, as mentioned before, a single hard inquiry will likely not be viewed as a red flag by lenders. In fact, when you’re shopping around for a new loan, lenders may expect to see a hard inquiry or two on your report already.

It is also important to remember that your total credit score is made up of numerous factors, including how many loans you have, which debts you pay off regularly, and other financial factors. So, although there may be a negative impact on your credit score, it is temporary, and other factors exist that can help offset that change.

You can build up your credit score by taking the right steps with a debt consolidation loan.

Here’s one way this is possible.

By consolidating revolving credit debt (like credit card debt) through an installment credit (like a loan), you decrease your credit utilization ratio. A lower credit utilization ratio means that you’re using less credit than the total amount available to you, which is a good thing from a credit perspective.

Your credit score may also improve if you pay your debt consolidation loan on time each month. Each payment is reported back to the credit bureaus and may help increase your score. It is a slow process, but your score may increase over time if you keep up with your payments.


Now you know how a debt consolidation loan can affect your credit score—both negatively and positively. If you’re looking to consolidate your debt with a loan that provides flexibility and one affordably low monthly payment, call our team at 866.280.5476 to speak to a loan specialist or use our Payment Estimator to see how affordable your monthly payment could be in 30 seconds or less.