Does consolidating your student loans affect your credit

Therefore, even for a standard 4-year bachelor’s degree you could easily have as many as 8 separate accounts showing up on your credit reports if you consistently relied on student loans to finance your education.To some degree, yes, having multiple student loans appearing on your credit reports may cause a small amount of credit score damage.By that token, paying your student loans off provides you a with a means to build credit –as long as you have the means to pay them back according to schedule.If you can’t, then your credit score can actually suffer, because instead of building a good credit history, your loans are building a bad one.Federal and Private There is also the distinction between the types of loans that you have.There are federal student loans and private student loans. If you have both, you should never consolidate federal and private loans together.When it comes to student loans, the landscape has certainly changed.

You either won’t get approved for loans and lines of credit or you’ll face really high interest rates and harsh terms.This is true even if your student loans are in deferment, in forbearance, or if you are actively making on-time monthly payments.The reason why the existence of multiple student loans, even those with no negative payment history, can be have a negative impact on your credit scores is due to the fact that scoring models like FICO and Vantage Score consider the number of accounts with balances currently appearing on your credit reports in their scoring processes.Since Federal loans cannot be used for housing or transportation costs, the inability to get a private loan can still prevent some students from attending college.Applicants for Federal loans should also keep in mind that even with a good credit score, a bankruptcy that was applied for within 90 days of filing a FAFSA application will result in it being rejected.

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They’re separate animals, so to speak, and you just shouldn’t try to combine them.

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