Absolutely — but it depends on your consolidation path:
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Debt Consolidation Program (DCP):
You’ll surrender your unsecured credit cards (they’re usually closed or frozen), though secured cards can be used responsibly to help rebuild credit. -
Loan-based or Balance Transfer Approach:
Your cards usually stay open—but using them wisely is key. Charge only what you can pay off in full each month to avoid reversing your consolidation gains.
Does keeping or canceling credit cards impact your credit score?
Yes:
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Closing cards reduces your available credit, which may raise your percentage of used credit and shorten your credit history—both factors that can lower your score.
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Keeping cards open and unused helps improve your credit utilization rate and maintain your credit history.
Will using a card during or after consolidation hurt your progress?
Only if you fall into the old habit of carrying balances. If you can pay in full each month, responsibly using credit cards can help you rebuild credit. However, adding new debt can derail your consolidation plan and erode your credit.
When is it safe to reapply for a credit card?
Generally, after 6–12 months of consistent payments post-consolidation, your credit score may be strong enough to qualify for a new card. If you underwent a consumer proposal or bankruptcy, be prepared to wait several years before reapplying.
Why is consolidation often better than bankruptcy for preserving credit?
Because a well-managed Debt Consolidation Program doesn't carry the long-lasting credit hit that bankruptcy does. By consistently making payments and eliminating debt, your credit can recover and even improve over time.
Bottom Line
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DCPs often require closing unsecured cards but allow secured options for rebuilding.
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Loan or balance-transfer methods keep cards open—but only helpful if used to support repayment, not rack up debt.
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Keep cards open—but inactive when possible, to help your credit score.
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New cards can typically be pursued after 6–12 months of good payment history.
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Overall, consolidation—properly handled—is a healthier credit strategy than bankruptcy.
