Does consolidating your student loans affect your credit
The principal reason is you will have a new inquiry and huge installment loan appear on your credit report, even though you also will have much lower debt-to-credit ratios on your credit cards.
The potential underwriting risk that you present to a new lender is measured in conjunction with your credit score and will now have to incorporate that you have the chance to begin adding to your credit card balances again.
Debt is costly and can prevent us from reaching financial goals (or at least prevent us from reaching them when we’d like to).
Some people consider credit card debt bad and mortgage or student loan debt good.
And the fact that many people do just that is why the action will temporarily cut your rating.
For the record, and for those who don't know the difference, a credit rating and a credit score are 2 different things.
The 3 major credit bureaus (Equifax, Experian, and Trans Union) compile this information and make it available, along with your credit score, to lenders who want to find out how creditworthy you are.
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In theory, debt consolidation should not have a major impact on your credit score.
However, the fact is, debt consolidation can improve or hurt your credit score.