Loan Consolidation?

[Anonymous]

How would consolidating my student loans affect my credit score? I have about $40,000 in loans. They are in repayment and they are on time. Will it basically show as I paid off the old loans and then have one new HUGE loan on my report? I was looking into doing the consolidation loan offered by the federal government.

I was interested as it would be easier to keep track of the interest accruing and get ahead of it to reduce my principal balance faster. I'm currently in a huge credit rebuilding phase and if the consolidation loan will have a negative effect on my score, I don't want to do it. 

[SCF]

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@Anonymous wrote:

Will it basically show as I paid off the old loans and then have one new HUGE loan on my report?

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Yes,  your old loans will be closed with a $0 balance a comment like "consolidated" or "refinanced."  A brand new tradeline for the total amount will be added to your report by your new servicer.  I don't think there is a credit check associated with federal consolidation, so no new inquiry, but you will have a drop in your average age of accounts, a new account ding, and possibly lose a few points for having the balance be 100% of the amount borrowed.

Of course, all of those things are relatively minor and fix themselves over time.  Make your decision on the other benefits of consolidation, like making managing your student loans simpler, and let your credit take care of itself as you make on-time payments.