Loan Consolidation & FICO Score Impacts

[TrueGeminiNC]

Hi All,

Out of curiosity - for those who recently completed a consolidation loan, did you experience any changes in your FICO score?  I recently submitted an application online for a consolidation loan.  The net result will be - instead of 10+ tradelines, I will now only have a maximum of 2 tradelines.  Additionally, the new loan will add a new tradeline to my credit profile.  

Thoughts?

[SCF]

The impact will be minimal.  Your old tradelines will not be removed, they will report as closed with a $0 balance and continue to report for 10 years or so if they are positive accounts.  You may see a small dip in your score initially from that "new account ding" but as the consolidation loan ages, your score will improve.

[TrueGeminiNC]

---

@SCF wrote:

The impact will be minimal.  Your old tradelines will not be removed, they will report as closed with a $0 balance and continue to report for 10 years or so if they are positive accounts.  You may see a small dip in your score initially from that "new account ding" but as the consolidation loan ages, your score will improve.

---

Thanks.  That is my fear - how hard of a ding I will see for the new tradeline.  I am hoping to purchase a new car in June and I hope the hit is not major and if so - my scores recover.

[Luscher]

your score should recover by 6 months (June)

[Anonymous]

I'm going to be consolidating/changing to REPAYE in about a month myself. The number of accounts will drop from 20 to 1 (or 2, if i keep the second servicer separate). I know this will have minimal impact. The new account may ding slightly but will go up in 6 months per the advice above, and that's okay too. 

My biggest concern on score change is how the loan value to original amount will affect it. Right now, my reports say a negative factor is "value too high to original amounts". About half of them are paid down to 80-90% of original value, and the other half all exceed due to interest during school and a period of deferment - ranging between 120-150% of original value. Does the new loan reset all of these to 100%? Will it affect me positively? negatively? minimally? My biggest hope is that even if I don't see an immediate score increase, if it does reset to 100% I will immediately be reducing the overall value percetage dropping and within a year or so won't be punished by the "value too high" negative factor.

[SCF]

Utilization on installment accounts (like student loans) is also a small factor in your credit score, and unlike with credit cards, there's no substantial increases to be seen from hitting certain milestones (like getting under 30%).  Your consolidation might result in a few points of shift either way due to the change in utilization, but again, it's one of those little things that will mind itself as long as you take good care of your loans.