Consolidating student loans lower credit score
There are risks and rewards to every financial situation and decision made.
With inexperience and prevailing financial illiteracy, mistakes often occur and naïve mismanagement can leave young adults wondering how to recover.As financial expert Dave Ramsey once wrote, “You can only do it once.”Applying for any line of credit requires serious consideration and weighing of risks and rewards.When it comes to student loans, the stakes are even higher — without them, some students could never attend school.For such installment loans, the important factors are how much total debt you owe and, of course, most importantly if you have missed any payments. It can be helpful if you have education debt from multiple lenders or student loan guaranty companies.To consolidate student loan debt, you get a single loan that is then used to pay in full your outstanding debt from the various lenders who provided you with student loans.The short answer to that question is: Just like any other line of credit affects your credit score.
The long answer is: It’s complicated, and important to do correctly.
Your credit history is a snapshot of who you are financially.
Student loans usually appear on a credit report as multiple loans, but that doesn’t look bad to lenders.
Likewise, understand every debt holder’s credit portfolio will look different and there is no one-size-fits-all solution for how to best handle debt.
As with all things financial, the more you know about options available and your particular situation, the more control you will have over your financial portrait.
Consolidating is often the smartest move, but in some situations, it could be more savvy to keep federal loans separated from private loans.