I recently consolidated my student loans and this morning I got a notice that my Equifax score dropped 20 points because of it!! I thought consolidating was a good thing, why did it hurt my score so much?? It's so frustrating and sad because I just got my score way up 
@stylenjen wrote:
I recently consolidated my student loans and this morning I got a notice that my Equifax score dropped 20 points because of it!! I thought consolidating was a good thing, why did it hurt my score so much?? It's so frustrating and sad because I just got my score way up
Consolidation is often a good thing financially, but FICO wise not so much.
I've recently got enough datapoints where I'm absolutely convinced that installment utilization counts in FICO 8 (and EX 98 model too) over in the Installment Utilization thread in UFS, so what likely happened is you had several SL's that had some amounts already paid off, and if I had to guess they were probably <80% original balance but that's something of a SWAG based on early data.
You then paid them all off, got the consolidation loan, which is now reporting at 100% of balance or darned close to it. Even if the others aren't reported paid / closed yet it might've monkeyed with the score.
Even in my case, I paid down my installment loans from aggregate 61% or thereabouts, to <10% and my EX FICO 8 just jumped 19 points (!) this morning and that's with my file which has a slew of derogatories on it and limited history (AAOA 2 years) on it, so I can easily see your losing 20ish points on this one.
Beyond that there's all the usual bits, possible inquiry landing on the report and new tradeline changing your AAOA but that big of a drop for a single account, it's likely more than that as I think as IIRC your file isn't thin.
Anyway, if it was the right decision financially, don't look back, that's a win as FICO scoring is less important than personal finances.
@Revelate wrote:
@stylenjen wrote:
I recently consolidated my student loans and this morning I got a notice that my Equifax score dropped 20 points because of it!! I thought consolidating was a good thing, why did it hurt my score so much?? It's so frustrating and sad because I just got my score way upConsolidation is often a good thing financially, but FICO wise not so much.
I've recently got enough datapoints where I'm absolutely convinced that installment utilization counts in FICO 8 (and EX 98 model too) over in the Installment Utilization thread in UFS, so what likely happened is you had several SL's that had some amounts already paid off, and if I had to guess they were probably <80% original balance but that's something of a SWAG based on early data.
You then paid them all off, got the consolidation loan, which is now reporting at 100% of balance or darned close to it. Even if the others aren't reported paid / closed yet it might've monkeyed with the score.
Even in my case, I paid down my installment loans from aggregate 61% or thereabouts, to <10% and my EX FICO 8 just jumped 19 points (!) this morning and that's with my file which has a slew of derogatories on it and limited history (AAOA 2 years) on it, so I can easily see your losing 20ish points on this one.
Beyond that there's all the usual bits, possible inquiry landing on the report and new tradeline changing your AAOA but that big of a drop for a single account, it's likely more than that as I think as IIRC your file isn't thin.
Anyway, if it was the right decision financially, don't look back, that's a win as FICO scoring is less important than personal finances.
Revelate, through your studies do you think people (like me) who have consolidated 2 or so years ago should open up another installment/rebuilder type loan? I have only 1 installment loan and didn't know if another one would help. I will be paying on this loan for 347569374865987345 years so I'm curious to your thoughts.
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