Why should you consolidate your student loans?
Why Is This a Problem?
- When you went to college, you got a check each semester for your loan.
- When you left college, your loans showed up on your credit report once for each check you received.
- Yet you only make one payment, not multiple payments for each semester.
Why Is This Important?
- Having so many open student loan accounts dilutes your credit report.
- This makes it harder to improve your credit score when you do things like use a rent reporting service.
- If you have 10 open accounts and add 1 more it's only a 9% increase in payment history; if you have 3 open accounts and add 1 more it's a 25% impact.
- It's like throwing a pebble into a pond and expecting a big splash — it won't happen.
- Consolidating your loans reduces your loans to 1 account — the balance is the same, just merging the loans into one account number.
Avoiding the Student Loan Pitfall
- If you do not consolidate your student loans and you end up with a 30-day late payment penalty one month, all of the student loans on your report will be marked 30 days late.
- Eight student loan accounts will equal eight 30-day late payments.
- Expect your credit score to drop over 200+ points for this one mistake.
How to Resolve This Issue
- Visit studentaid.gov to complete the process to consolidate your student loans into 1 account — it takes about 30 minutes.