Debt consolidation is often lumped in with credit counseling and debt management strategies. Unfortunately, thanks to shady companies (and even downright scams) that give the credit counseling and management industry a bad name, debt consolidation is avoided by consumers who could benefit.

Before you write off the idea of consolidating your debts, stop and consider that you might be making your decisions based in fear of these 6 myths:

1. Consolidating Debt is the Same as Credit Counseling or Debt Management Programs

You can consolidate your debts as a way to manage your credit situation, but it’s a strategy and not the same thing as a program. Most third-party programs require you to stop making payments while they negotiate the terms of your debt or your repayment amount. When you consolidate debt, you pay off smaller debts with one larger loan. You aren’t negotiating anything; you are simply paying what you already owe.

2. A Third-Party is Required to Consolidate Debt

It’s true that there are plenty of “credit counseling” and “debt management” companies that claim to help you consolidate your payments. However, you don’t need them (or their potentially high fees) to create a more manageable debt situation. All you need to consolidate your debt is a bigger loan to pay off your smaller loans. This loan puts your debt “under one roof,” reducing the number of payments and interest rates you need to keep track of each month. Do it yourself with a loan from a reputable provider.

3. You Need to Own a Home

Many consumers mistakenly believe they need to own a home to consolidate debt. While your home equity can be used for debt consolidation, it’s not necessary. An unsecured personal loan does just as well — and you’re not putting your home at risk by using it to turn unsecured debt into secured debt.

4. You’ll Go Deeper in Debt

When you consolidate your debts the right way, you won’t go into deeper debt. Properly used, this strategy helps you pay off your smaller loans. Say you have four different loans:

Credit Card A: $1,200
Credit Card B: $700
Credit Card C: $1,800
Payday Loan: $550
Your debt totals $4,250, so you get an unsecured personal loan for $4,250 and use that money to pay off all of your smaller loans. Now, all your credit cards are paid off and you’re free from your payday loan. You have the same amount of debt, but now you only have one loan and one payment (and probably a lower overall interest rate). As long as you have changed your spending habits so that you don’t run up more credit card debt, you are in good shape.

5. Consolidating Debts Hurts Your Credit Score

Joining a credit management program can hurt your credit because you often stop making your payments to leverage your bargaining position. Consolidating your debt into one loan, on the other hand, might actually help your score. Your smaller accounts are now reported as paid off. When you use an installment loan to pay off your revolving credit lines, you reduce your credit utilization, which is a major factor used when determining your credit score. As long as you keep up with payments on your debt consolidation loan and avoid running up additional debt on your freed up credit cards, your score can benefit.

6. It’s Hard to Get Approved for a Debt Consolidation Loan

The good news is that there are many resources available when you want to consolidate debt. LendingTree is an aggregator that allows you access to consolidation loan quotes from several sources at once. Other resources, such as P2P loans, are also widening access to strategies that can help you consolidate debt and take back control of your financial life.

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