On the other hand, consolidating could mean you lose certain borrower benefits (e.g., student loan forgiveness, deferments, flexible payment plans), lengthen your repayment period, and even end up paying more over time.
But does it negatively or positively affect your credit?
Student loan consolidation can negatively affect your credit because, just like applying for any other type of loan, it’s going to show as a hard inquiry on your credit history.
According to Equifax, this “ding” can lower your score by a “couple of points,” which remains on your credit report for two years.
You’re showing that you’re managing your debt correctly and are able to pay your loan as agreed.
Student loans are often treated as installment plans on your credit report.
Another thing to note about deferments and loan repayment is that if your student loan becomes delinquent, you may no longer be eligible for a deferment. Once your loan is gone, you’re no longer making those monthly payments on time, thus ending your positive payment history on your credit report.
As always, research the options but consider what is going to be best for you.Having multiple types of credit, such as a loan and credit cards, can improve your credit.Once your loan is paid off, you’re eliminating that type of credit.A growing student loan debt can deter a lender, such as for a mortgage, from loaning to you, according to Money Crashers. In any situation, putting a loan in deferment is better than not making payments.Deferments aren’t an option for every loan or every situation, but if you’re experiencing an economic hardship, it’s something to explore. Working hard, making extra payments, and paying off your student loan balance will help your credit, right? Paying off your student loans too quickly can actually bring your score down, according to All