Does consolidating your student loans affect your credit
It’s not so much the monthly payment per student loan that lenders have to overcome, but in most cases it’s multiple student loans with multiple lenders, each showing a payment anywhere between - per month.For example, a consumer’s credit report might show six separate student loans totaling ,000, each with a payment of per month.Lenders are required by law to account for all material debt known to them in the supporting documentation a borrower provides in anticipation of acquiring a home loan.Student loans are the wildcard because they can show a payment at per month on an obligation all the way up through 0 per month and higher.That translates to a 0 per month obligation, which can reduce borrowing power by upwards of ,000!Let’s look at the path for a student loan borrower who’s trying to buy a house: If a student hopes to someday buy a home, he or she would be well advised to avoid private lenders when obtaining a student loan.Just like all consumer debts, student loans can reduce the ability to borrow because they erode income.
In many instances, the student loan payments are deferred, extended out into a future date when the payments kick-in– if they have not already.
It helps your credit score by closing the multiple loans.
Your credit report will report the loans you consolidated as PAId/Consolidation. Now you have one large bill and as you pay on it ON TIME it will increase your credit score.
For example, you have a degree in accounting and you’ve recently taken a job as an accountant.
Furthermore, if you were previously a full-time student, and you were not required to file a federal income tax return, you can still qualify for financing as you were not required to file IRS tax returns.