Consolidating student loans affect credit score
The cliche about rearranging the deck chairs on the Titanic came to mind when I read your question.Debt consolidation won't address the real problems that may sink your credit rating!You can even consolidate one student loan if you so desire.The benefit of loan consolidation is that instead of making multiple monthly payments, that payment will be consolidated into one, and the payment should be significantly lower.The principal reason is you will have a new inquiry and huge installment loan appear on your credit report, even though you also will have much lower debt-to-credit ratios on your credit cards.The potential underwriting risk that you present to a new lender is measured in conjunction with your credit score and will now have to incorporate that you have the chance to begin adding to your credit card balances again.
Consolidation does not always save you money or make the loan easier to repay.
Lenders who used to be major players in the game have disappeared, and the rules governing consolidation aren’t the same anymore. The answer may not be as easy as it seems, but hopefully we can help you navigate those waters.
The average student loan debt in this country is right around ,000, and only about 19% of 2009 college graduates are employed at their time of graduation. Student loan consolidation basically means combining multiple student loans into one.
This article discusses some of the reasons for and against consolidation.
When it comes to student loans, the landscape has certainly changed.