Does consolidating student loans improve credit score

by  |  07-Feb-2015 19:02

Consolidating private student loans can be a difficult feat, but one possible solution is to have a cosigner help shoulder the burden of the new debt.

Although this is not a surefire way to get a consolidated loan application approved, it can be a beneficial tool.

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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.

In other words, while paying off a loan is inevitably a good thing for credit scores, holding an account open and responsibly managing the debt can actually be more beneficial to your credit score than paying it all off in one lump-sum.

That being said, the positive impact of maintaining an open line of credit could be miniscule and not worth the additional interest accrued from keeping the line active.

Student loans can also negatively affect your credit if you have a high balance that isn’t budging or, with interest, possibly even growing.

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