Many people with a bad credit score often have a high amount of debt to go with that score. A bad credit score is often the result of someone accruing too much debt and being unable to pay off that debt. People with multiple debt sources often turn to bad credit consolidation loans in order to make their debt more manageable.
While this can be a good option for some people, there are alternatives that may be more cost-efficient than consolidating your debt. There are many proponents of keeping debt separate and formulating a repayment plan that you can stick with. Often, financial advisors will tell those who have a large amount of debt from multiple sources to pay off the debt sources, from smallest to largest, by budgeting, saving, and living within your means.
Paying the minimum payment on all forms of debt except the smallest, and then putting as much money towards that small debt as possible, is one of the most effective ways of handling multiple forms of debt.
The benefits of a consolidation loan are that it does make your debt more manageable, but since you are only paying on one form of debt you may not be able to increase your credit score as quickly, since it may take longer to repay that debt, and you may end up paying more over the life of a consolidation.
The only way to figure out the best option for you is to sit down, calculate how much you owe, and run the numbers to see if forming a repayment plan to attack debt separately versus repaying your debt after it his been consolidated, factoring in interest and the time it will take you to repay, is going to show you what your best option would be.