Does consolidating student loans hurt credit
The type of adverse history that could prevent approval for PLUS loans includes 90 days delinquency on payments or a loan in default.However, if a parent’s credit score is low for another reason, such as the occasional late payment, they may still be eligible.But there’s good news: Having a negative credit score or a lack of credit history by no means prohibits you from receiving loan approval.Instead, credit may determine what types of loans and interest rates are available to you. Federally funded loans are available for students with good or bad credit scores.
Of course, if you have really excellent credit, then a few missed payments in the first month of your debt management program CAN make a difference and lower your scores.Students can receive subsidized Stafford loans and Perkins loans (which are both federal loans) without completing credit checks; this way a lack of history or a negative history does not affect eligibility.Your loan approval and interest rate will not be based on credit scores. One quick thing to remember: If you do have old federal student loans, you will need to make sure the payments are current before applying for another one.But really, if your credit is that high you’d be better off consolidating on your own with a debt consolidation loan or credit card balance transfer. Any time you miss a payment, you hurt your credit score.
So if you consolidate your debt by transferring credit card balances or by taking out a personal unsecured consolidation loan, you shouldn’t have any credit damage unless you miss a payment.When you start a debt management program, you’re adjusting the payment schedule for your credit cards.