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Does consolidating your loans hurt the number of accounts you have?

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Established Member

Does consolidating your loans hurt the number of accounts you have?

So I am wondering if consolidating my students loans hurt my credit mix? I have 19 different student loans and that seems to be helping me out, along with 2 credit cards. If I suddenly have 2 credit cards and just one installment loan would that look bad and make my score go down? I had to group up all my student loans to get a better income based repayment rate. If my score is going to drop a lot because of this, I am going to have to apply for an auto loan now, rather than waiting until December. My car is on its last legs. 

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Frequent Contributor

Re: Does consolidating your loans hurt the number of accounts you have?

Probably won't hurt much. Maybe new account penalty, and very slight utilization hit if any. Depending on current age of accounts it could vary.

 

Since you're on IBR, I assume you haven't made much of a dent in the previous loans, so they aren't paid down, in relation to utilization. With a consolidated one, the utilization is reset to 100%, but it's probably not much of a hit since you were doing IBR, anyway.

 

You only need 1 installment loan for scoring benefits.

 

With more info like current scores and account ages, someone else may be able to suggest whether to get an auto now or later

 

From a general perspective, if I needed a new auto loan, I'd probably go for it now than later when I get a score hit, December is only 5-6 months away. Ultimately it depends on how your finances are and your situation and choices


EX8: 741 | Oldest: 10 mo. | 50K Club
Message 2 of 6
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Re: Does consolidating your loans hurt the number of accounts you have?


@Dumbee wrote:

Probably won't hurt much. Maybe new account penalty, and very slight utilization hit if any. Depending on current age of accounts it could vary.

 

Since you're on IBR, I assume you haven't made much of a dent in the previous loans, so they aren't paid down, in relation to utilization. With a consolidated one, the utilization is reset to 100%, but it's probably not much of a hit since you were doing IBR, anyway.

 

You only need 1 installment loan for scoring benefits.

 

With more info like current scores and account ages, someone else may be able to suggest whether to get an auto now or later

 

From a general perspective, if I needed a new auto loan, I'd probably go for it now than later when I get a score hit, December is only 5-6 months away. Ultimately it depends on how your finances are and your situation and choices


Thanks for the reply.

My scores are: EQ: 673, TU: 695, EX: 705

You are totally right about my IBR making no progress on my student loans.

My average age of accounts is ten years, two months and oldest account is 13 years, 5 months. I applied for a NFCU cashRewards card a week ago and got a 25,000 credit limit with 9.65% APR, so when that hits my credit report that's going to lower my age of accounts. If I get a car loan now, I would have $3000 for a down payment and was planning on a $7000 down payment in Dec. If I get a car now, I would go down a trim level and that would save me $6000 on the cost of the car. Not ideal but I'm not sure what to do. My wife is an educator and everything with her job is kinda up in the air right now as COVID goes around. There's so much here to look at. 
If my score only takes a small hit then I guess waiting until December makes more sense, I will know my wife's work situation better, I will have a larger down payment, I will get the Sonata Limited that I want and it will be cheaper. But if it's a big hit then I am not sure my current car, a 2000 Maxima, would last a couple of years until the score popped back up. 

Sorry for the rant. I am new to actually caring about my finances. A year ago my scores were in the low 500s. I've worked hard to get my scores up and I didn't know my lumping my student loans together was going to hurt my scores in the short term. 

Message 3 of 6
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Re: Does consolidating your loans hurt the number of accounts you have?


@Broadwayblues wrote:

So I am wondering if consolidating my students loans hurt my credit mix? I have 19 different student loans and that seems to be helping me out, along with 2 credit cards. If I suddenly have 2 credit cards and just one installment loan would that look bad and make my score go down? I had to group up all my student loans to get a better income based repayment rate. If my score is going to drop a lot because of this, I am going to have to apply for an auto loan now, rather than waiting until December. My car is on its last legs. 


Just a couple thoughts:

 

I have seen some people say that when they consolidated their SLs, it removed their old SLs (the original loans that are now being consolidated). I am not sure why and this did not happen to me, but that could wreck AAoA, possibly AoOA if they are your oldest TLs, and thick vs. thin credit profile. If they remain, that is a non-issue in all areas.

 

The consolidation will be a new TL, so you will get dinged for a new TL and it will lower your AAoA and the more new TLs you add (CCs you mentioned), the further it will lower it. It is a small percentage of scoring, but I have had impact from losing my oldest TL this month to my AAoA and AoOA and thus lowered my scores some (I also added 4 TLs in the last 12 months, so that did not help lol). I have seen score improvement at the 3 month and 6 month marks from new TLs (the newest TL). So if you wait out the next 5-6 months, your scores should rebound a little anyway and be able to get the car you really want!

 

If you are over 100% utilization it will bring it down to 100% util when you consolidate. If you are under 100% util, it will raise it to 100% when consolidated. I have been dinged for "stagnant accounts", being that no progress in paying down the balances, and "balances too high on installment loans". Many say they have had no issue with this, but I don't have great scores, so maybe that is why. Currently, though, those are some reason codes I get on apps/CRs. So it may help or not, just and extra thing I noticed.

 

Good luck!




Starting Score: 2•20 | EQ 550 | TU 498 | EX 505
Current Score: 5•20 | EQ [F8 611] [F9 671] [EQ5 641] [VS3 641] | TU [F8 576] [F9 555] [TU4 537] [VS3 619] | EX [F8 593] [F9 583] [EX2 614] [VS3 607]
Goal Score: 680


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SO Starting Score: 2•20 | EQ 502 | TU 484 | EX 521
SO Current Score: 5•20 | EQ [F8 607] [F9 533] [EQ5 653] [VS3 615] | TU [F8 582] [F9 559] [TU4 561] [VS3 602] | EX [F8 614] [F9 549] [EX2 633] [VS3 613]
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Message 4 of 6
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Re: Does consolidating your loans hurt the number of accounts you have?


@LaHossBoss wrote:

@Broadwayblues wrote:

So I am wondering if consolidating my students loans hurt my credit mix? I have 19 different student loans and that seems to be helping me out, along with 2 credit cards. If I suddenly have 2 credit cards and just one installment loan would that look bad and make my score go down? I had to group up all my student loans to get a better income based repayment rate. If my score is going to drop a lot because of this, I am going to have to apply for an auto loan now, rather than waiting until December. My car is on its last legs. 


Just a couple thoughts:

 

I have seen some people say that when they consolidated their SLs, it removed their old SLs (the original loans that are now being consolidated). I am not sure why and this did not happen to me, but that could wreck AAoA, possibly AoOA if they are your oldest TLs, and thick vs. thin credit profile. If they remain, that is a non-issue in all areas.

 

The consolidation will be a new TL, so you will get dinged for a new TL and it will lower your AAoA and the more new TLs you add (CCs you mentioned), the further it will lower it. It is a small percentage of scoring, but I have had impact from losing my oldest TL this month to my AAoA and AoOA and thus lowered my scores some (I also added 4 TLs in the last 12 months, so that did not help lol). I have seen score improvement at the 3 month and 6 month marks from new TLs (the newest TL). So if you wait out the next 5-6 months, your scores should rebound a little anyway and be able to get the car you really want!

 

If you are over 100% utilization it will bring it down to 100% util when you consolidate. If you are under 100% util, it will raise it to 100% consolidation. I have been dinged for "stagnant accounts", being that no progress in paying down the balances, and "balances too high on installment loans". Many say they have had no issue with this, but I don't have great scores, so maybe that is why. Currently, though, those are some reason codes I get on apps/CRs. So it may help or not, just and extra thing I noticed.

 

Good luck!


I am just going to apply at NFCU in the morning for an auto loan. My wife has her almost new car in the shop and I don't like the idea of her driving my 20 year old ancient Maxima around if we can avoid it. I'm sure she's going to be happy my car has A/C but otherwise it's pretty much a junker car. I appreciate everyone's feedback, I hope to be posting in the approvals thread soon.

Message 5 of 6
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Re: Does consolidating your loans hurt the number of accounts you have?

Well I applied this morning after not sleeping much last night. (I was nervous lol) and I got $34,000 at NFCU at 3.99% for 72 months. This was the highest APR that I would take. I know my credit isn't perfect but I didn't want to be paying over 4% APR. Now I get to see what Hyundai will offer, I just applied with then. 

Message 6 of 6
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