Does consolidating your student loans hurt your credit

by  |  27-Oct-2019 06:47

There are a couple of ways that paying off an installment loan affects your credit score.

The number of accounts you have that have balances is one factor in how your credit score is calculated.

Those are the two biggest factors in determining your credit score.

does consolidating your student loans hurt your credit-49

(Check your Experian credit score free on to see where you stand.) When it comes to credit scores, there’s a big difference between revolving accounts (credit cards) and installment loan accounts (for example, a mortgage or student loan).

Paying an installment loan off early won’t earn improve your credit score.

Paying off an installment loan though doesn’t have as large of an impact on your score, because the amount of debt on individual installment accounts isn’t as significant a factor in your credit score as credit utilization is.

And while paying off an installment loan early won’t hurt your credit, keeping it open for the loan’s full term and making all the payments on time is actually viewed positively by the scoring models and can help you credit score.

In some cases, debt consolidation can help your credit score. It can also depend on which option you use for consolidation, since there’s more than one way to consolidate your debt. When you consolidate debt, you have a payment plan that you’re supposed to follow.

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