These 2 debt relief options won't hurt your credit, according to experts

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With inflation and interest rates high, many consumers are struggling financially. The burden can be particularly heavy for those carrying credit card debt . The average interest rate on credit cards now sits at over 21% , up from just 14% a few years ago. The result is steadily rising balances and minimum payments that can often feel out of reach.

Fortunately, there are options for tackling that debt effectively — and without hurting your credit score in the process. We asked some experts for their thoughts on the best ways to do so.

See what debt relief option works best for your situation here now .

2 debt relief options that won't hurt your credit, according to experts

Looking to reduce your debt without damaging your credit score? Here's how the experts we spoke to suggest you proceed.

Debt consolidation

Consolidating your credit card debts — or moving them all to one lower-interest product like a personal loan — is arguably the best way to tackle your debt if you want minimal damage to your credit.

"Debt consolidation can be helpful if you can get a lower interest rate," says Kendall Meade, a financial planner at SoFi. "It reduces the total amount you owe and allows you to pay it off more quickly."

Initially, you might see a small dip in your credit score , as taking out a new loan requires a hard credit inquiry. This lowers your score by three to five points for two years, according to Saundra Curry, co-founder of BC Holdings of TN, a financial wellness and educational platform.

Consolidation could also hurt your score by reducing the average age of your accounts, which accounts for 15% of your score, Curry says. First, it adds a brand new loan to the mix. It can also hurt if you close out the credit card accounts you're consolidating — especially if you've had them for a while.

"If the average age falls below 10 years, it will lower your score," Curry says.

Still, many experts say consolidation is your best option for paying off debts while minimizing credit damage. And if you make on-time payments consistently and don't rack up additional credit card debt, it could actually help your score in the long run.

Explore your debt consolidation loan options here today .

Debt management plan

A debt management plan is your next-best option if you want to pay off debts without too much of an impact on your credit score. With these, a credit counseling or debt relief company secures lower rates with your creditors, and then develops a payoff plan on your behalf. You'll then make monthly payments to your debt relief company, which will divvy that out among your creditors as necessary.

"Debt management programs can provide additional assistance," says Brittany Pedersen, director of deposit and payment operations at Georgia's Own Credit Union. "Not only can you consolidate your debt into one payment, in many cases, you can get your interest rate reduced. You pay the debt management company, and this is reported to your creditors."

A debt management plan won't directly impact your credit, but there may be some elements of these plans that can bring your score down along the way. Some plans may require you to close accounts, for example, which could lower your credit age and take down your score. This might also send your credit utilization ratio up, as you'd suddenly have less credit available. This could lower your score as well.

"While consolidation loans have the least impact on your credit, debt management programs are also a good option," Pedersen says.

See if a debt management plan is right for you now .

Create your own debt reduction plan

You can also just DIY your debt strategy. You can use the snowball or avalanche payoff method, or combine the two into what Meade calls the "fireball" method.

"I tell my clients debt with interest rates lower than 7% can be considered 'good debt,' while 7% or higher is considered 'bad debt,'" Meade says. Once you know which camps your debts fall into, pay the minimums on all your accounts, and put any extra money you have available to your "bad debt" with the lowest balance. Once that's paid off, put the money from that payment toward the next-lowest bad debt, and so on.

Curry says focusing on one debt at a time — while making minimums on the others — is a great way to "turbo charge" your debt payoff . It also won't hurt your credit and, Curry says, will actually increase your score as you reduce your debts.

"The best way to eliminate debt is through self-management with strict budgeting and a plan to reduce debt and interest charges quickly," says Michael Sullivan, personal finance consultant at credit counseling agency Take Charge America. "It costs nothing and has no negative impact on credit ratings."

Options that will hurt your credit

The two things you don't want to do if your credit score is a priority? That'd be debt settlement or filing for bankruptcy .

With settlement, a debt relief company negotiates with the creditors on your behalf, trying to get them to settle your debts for less than you owe. Typically, these require you to stop making payments for some time — a sure-fire way to hurt your credit score.

"The basic idea of withholding all payments until creditors agree to settle for less than the amount owed, requires accounts to go to default and collections, causing havoc on the your credit report for seven years," Sullivan says. "If successful, it can also result in amounts forgiven being declared as income and subject to taxes."

Bankruptcy is even worse. Not only does it come with hefty fees, but it stays on your credit report for up to 10 years.

"Bankruptcy is a last resort," Pedersen says. "It's costly and does the most damage to your credit score."

Talk to a professional

If you're not sure how to proceed with tackling your debts — or you need help safeguarding your credit score — contact a credit counselor in your area. They can help you create a personalized plan to pay off your debts while minimizing the impact on your credit.

And if you opt to use a debt relief company, be sure to shop around first. Check reviews, compare fees, and ask for recommendations from people you trust. You can also research them with the Better Business Bureau to assess their business practices.

Get started here .