To understand whether or not debt consolidation affects credit score is essential to start by defining terms. First, of what debt is, debt is money a person or a company owes from a lender. The money borrowed is called a loan, and it helps people start businesses or buy something they cannot afford at that time. The money borrowed is expected to be paid back in full plus interest. The lender has to earn something from the task, so they add more money to the initial amount and direct the borrower to pay the money back after a certain number of months or years.