Hello,
I have found another way of improving credit score after bankruptcy. If you're like many of us who have student loans, you know it wasn't discharged in bankruptcy (unless you filed a separate motion to have it dismissed.. of course.)
Well, I found that the loan usually is splt into a lot of little loans. And each one of those lines is an open line of credit! Places looking to offer you credit will look poorly on you if you have many open lines of credit. So, what do you do? You consolidate them! For me, it made all the loans I had go into two loans. One for subsidized loans and one for unsubsidized.
I also found a great link about how this helps our credit score! Here
How does loan consolidation improve my credit score?
When you consolidate your student loans, a number of factors are modified in your finances. Most of these changes will cause creditors to look more favorably upon you.
One factor that determines your credit score is the number of lines of credit that you have open. If you have too many, your score will go down. By consolidating your student loans, you replace your many student loans with one new loan. You still have the same amount of debt, but the number of lines of credit goes down, thus raising your score.
Another credit score advantage of student loan consolidation is that it will show that you have paid off all of your other loans. As you can imagine, a record of debt repaid is a good thing. Depending upon how your loans are consolidated, it could read that your loans were refinanced or it could just say that you paid in full. Either way, your credit score is helped.
One final advantage of consolidating your student loans is that it can often lower your monthly payments. This helps your credit score because the ratio of debt to income will go down. This especially helpful if you are trying to secure a mortgage.
The Bottom Line
Ultimately, if you have good or bad credit and are thinking about consolidating your student loans, it will depend upon the type of loans that you have. For Federal Loans, consolidation is usually a great idea, but for private loans it gets more tricky and it is important to be careful who you do business with.
