Does consolidating student loans help credit score
Only having to make one monthly payment is also super convenient. When taking out a consolidation loan, you may see an initial dip in your credit score because applying for a loan generally results in a hard inquiry into your credit report.There are multiple options for debt consolidation (more on this in a bit), but if you stick to a well-thought-out payoff plan, a new lower-interest loan is a viable way to pay off high-interest balances in one shot. For example, one common question about the tactic is, “Does debt consolidation hurt your credit score? “The degree to which they have a negative impact depends on how many inquiries you have over a specific period of time,” says Bruce Mc Clary, spokesperson for the National Foundation for Credit Counseling.The repayment period of most student loans is long enough; I’d be careful before extending it any longer.If you’ve graduated in the last six months, then consolidation may be perfect for you.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.You can even consolidate one student loan if you so desire.During this time, your odds of getting a lower interest rate are probably higher and most lenders won’t force you right into re-payment.
Check out every single detail and every bit of fine print before moving forward, and also keep in mind that many times there are additional fees involved in consolidating private student loans.Disadvantages There are other things to consider before going with consolidation.If you decide to “stretch out” your repayment period, you may end up paying more in interest for your loan depending how long it takes you to pay if all off (despite the potential lower interest rate).Second, one of the most important advantages I found with consolidating is the ability to convert to a fixed-rate loan.If your loans currently have variable interest rates, I’d definitely look into consolidating them.
Advantages There are however, many benefits to consolidating your federal student loans.