Does consolidating your loans, specifically student loans, affect your credit?

Answer 1

In order to accurately answer your question I would like to clarify a few things first. Are these Student Loans Private Student Loans or Federal Student Loans? In order to consolidate your Federal Student Loans under the FFELP Consolidation Loan Program you need to have at least $7,500 in Federal Student Loan debt.

Consolidating your Federal Student Loans can definately be a good idea, it can in fact help lower your credit score and improves your debt to income ratio. Also, it lowers your monthly payments and resets your forbearance and deferment time. For more in depth information on the benefits to consolidation as well as how to qualify for consolidation see the source below.

Answer 2

It depends on how you go about it. If you consolidate but retain other lines of credit in an "available" status you make yourself less worthy of other credit because potential lenders will look at total income versus total POSSIBLE debt. On the other hand, if you close those lines of credit or they are ONLY for student loans (of which you will incur no more) than you should be pretty much the same in-so-far as your credit goes. You need to carefully consider all aspects of consolidating, especially if the new lender is expecting you to put up collateral. Generally speaking, consolidation is not the wisest financial move you can make. Make sure you know all the facts of what you are getting into first !

Answer 3

no