Debt consolidation is simply a way of putting all your debts into one payment plan or product.
The idea behind it is that the consolidation will have just one smaller and more affordable monthly payment. You will also just have to deal with one company.
There are 2 main types of debt consolidation - product or plan
Product: Debt Consolidation Loan
Plans: Debt Management Plans
Debt Settlement Plan
A consolidation loan is most likely to have the least affect on your credit rating but if you are genuinely struggling with your payments a plan may be a better option for you as it is likely you will not be able to afford loan repayments anyway.
If you're juggling lots of different debts on credit cards, store cards and loans it can be very difficult to stay on top of them all. One missed payment can lead to increased debt, bad credit ratings and the spiral of debt will just continue.