@ccquest wrote:
They *can* remain on there for 10 years after the last activity. Some do seem to come off early so be prepared for that possibility.
+1
Me and SO consolidated in 2010 and the original accounts aged off just recently (so 10 years), but that was then.
There have been recent DPs of consolidating SLs and the original loans being removed immediately.
The reasoning behind lowering AAoA is this:
you are creating a new TL and that in itself lowers your AAoA immediately. Then at some point the original tradeline(s) falls off and further lowers AAoA.
Severity depends. If you have other equally old accounts that remain open, it should be less of an issue than say for myself and my SO, as we had virtually no accounts opened between 2010 and 2020 and none prior to 2010 (they had already aged off), thus drastically reducing our AAoA. I just posted recently that SO had 4 accounts (SLs that were consolidated) age off and it dropped his AAoA from 8 yr to 3y 6m (something like that). I recently had a huge drop too from SLs I consolidated aging off. 10 years came quicker than I expected. Our scores definitely reflected this reduction in AAoA.
Consolidation is good for only a few reasons:
1) lower interest rates
2) easier management of SL payments by reducing to 1 loan with 1 servicer (not a great reason, but reason enough for some)
or
3) you are required to consolidate to enter certain repayment programs if your loans are from 2010 or earlier (for fed loans).
If these are fed loans, it also makes sense to hold off on consolidation as a back up plan if you ever default on your SLs for a second time. No one wants to default nor usually plans on it, but say you default once, you can only rehab once. The only option if you default again is Consolidation and if you already only have a singular Consolidated SL, that would no longer be an option.
Consolidating SLs with Fed Loan also does not reduce your interest rates. What they do is average the interest between your SLs, so you may not really be paying less than before. You would have to do the math to see.
Lastly, if you are consolidating your fed loans into a private loan to lower your interest rate, you lose many repayment protections if you ever have reduced income, loss of income, or a major life event happens. Like no more deferment, forebearance, or IBR plans. Something else to consider.
I speak mostly of fed loans, so if your are private, the second half of my post will be meaningless to you, but I put it out there anyway, just in case.
Good luck!
as of 1/1/23
