Consolidating student loans lower credit score

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Too many credit inquiries can be viewed as a sign that a borrower is experiencing a financial hardship and is therefore more of a credit risk.However, shopping around for the best interest rates is considered a single inquiry by the credit bureaus, so in order to get the best deal.This could be bad for borrowers who don’t have any items on their credit report other than a student loan.If the old lines of credit, the original student loans, are closed and the new loan is the only open account, the age of credit will drop significantly.

I am wondering how this will affect my credit score other than a hard credit inquiry bringing it down a few points initially.By consolidating your student loans, many student loans are replaced with one new loan.The borrower still has the same amount of debt, but the number of lines of credit goes down, thus raising the credit score.Depending upon how the loans are consolidated, it could read that the loans were refinanced or it could just say that they were paid in full. One final advantage of consolidating student loans is that it can often lower your monthly payments.This helps borrowers who are looking for new lines of credit as it will improve their deb-to-income ratio.

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