Does consolidating loans hurt credit dating m nd og kvinder i danmark
This could be bad for borrowers who don’t have any items on their credit report other than a student loan.
If the old lines of credit, the original student loans, are closed and the new loan is the only open account, the age of credit will drop significantly.
One factor that determines credit score is the number of lines of credit that are open.
If consumers have too many, their score will go down.
The desire to improve and protect a credit score is responsible, but it shouldn’t be the first consideration.
The value in a high credit score comes from the ability to secure desirable terms in lending.
If the credit score is high enough to qualify for a low rate or favorable repayment plans, then the credit score has done its job.
The purpose of refinancing or consolidating student loans is to save money.
Too many credit inquiries can be viewed as a sign that a borrower is experiencing a financial hardship and is therefore more of a credit risk.
However, shopping around for the best interest rates is considered a single inquiry by the credit bureaus, so in order to get the best deal.
Ultimately, most borrowers will likely see a small increase in their credit score, but as noted in the comments by some readers, it is still possible that the credit score can drop.
That all being said, the credit score movement shouldn’t be a concern…
The main explanation for a drop in credit score is due to age of credit.