Effects of consolidating student loans
These loans let you combine most federal student loans into a new loan with a lower monthly payment.The lower monthly payment is usually the result of extending the repayment timeline.Each one of these student loans has its own due dates, interest rates and payment amounts.Keeping track of that many payments is complicated and part of the reason that 8 million Americans have defaulted on over 0 billion in student loans That is why student loan consolidation appears as such an attractive solution, but there are things you should know as you consider this approach.
The good news is that federal loans carry a six-month grace period so there is time to develop a plan for dealing with them.
This guide was created to answer questions and demystify the process of debt consolidation.
If you’re considering consolidating either federal or private student loans and worrying how it might affect your credit, keep reading to learn more. Because of the way your credit score is determined, there’s a chance debt consolidation could actually improve your credit score.
When you consolidate several loans into a new loan product with a lower interest rate and better terms, you are often able to secure a lower monthly payment.
Not only will a lower monthly payment make it easier to pay your loan bills on time each month, but it will lower your debt-to-income ratio, too.
This hard pull allows them to assess your credit worthiness, but it can cause a temporary drop to your credit score.