Does Consolidating Your Student Loan Bad For Your Credit Score Or Credit Report?

How does consolidating student loans impact your credit score and credit report in general. Is it wise to consolidate? What are the drawbacks in terms of your credit worthiness?

Answering this question is a complex one. Without all the facts the advice here should be only considered as a starting point. Generally speaking whenever you talk about debt consolidation, it is almost always has a negative repercussion on your credit score simply especially if the current lenders are consolidated with less than the original loan amount. In the long term however, you should see a positive effect on your credit report since you will hopefully have a smaller debt to income ratio, it is easier to make payments on time and you will have far less of number of credit lines on your credit report.

Exploring student loan consolidation is wise if you are having trouble making payments but keep in mind that if you do consolidate you might lose certain benefits such as loan deferment and loan forgiveness in certain cases such as the Perkins Loan. You have to weigh all the pros and cons before you decide on consolidation. As far as your credit report is concerned, without all the facts in front of me, I would say yes there will be some negative effects in the short term but if a student loan consolidation is going to keep you afloat then your long term credit report will end up looking good.

Below are some of the typical questions we get around this subject (all personal information removed)

• “Can I consolidate my student loan without affecting my credit?”
• “How is debt consolidation going to affect my credit score?”
• “Is there a way to consolidate my student debt without impacting my credit score?”
• “What is the best way to consolidate my past loans so that I can have a clean credit report and avoid lowering my credit score?”

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