Does consolidating student loans hurt my credit score
Even when you are applying through the same lender, you are basically taking out a new loan each semester or year.Each of those loans is a separate account, so it is standard practice for students to have multiple loans reported in their history.As a student loan lender, we get a lot of great questions about how student loans affect credit score. The answer depends on whether you’re talking about federal or private student loans.Federal loans don’t take credit scores into account, which is why every borrower gets the same interest rate regardless of financial profile. We’ve got you covered with our Student Loan Smarts blog series.Our expert tips and hacks will help you save money, pay off loans sooner, and stress less about student loan debt.
As long as you make the payments on time and in full, the multiple student loans showing on your credit report will not have any negative effect on your ability to get new credit.Federal loans almost always have better rates and terms than private loans, and once a federal loan is consolidated with a private loan, the benefits of the federal loan essentially disappear.Therefore, the first step to address student debt is to look at the types of loans held and the consequences of consolidating them.Home mortgage, auto loans, insurance rates, and even employment interviews all depend on your credit score.Interest Rates for many of these are greatly impacted on your credit score as well.