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Will consolidating student loans help to increase fico score?

AS333
New Member

Will consolidating student loans help to increase fico score?

IHi, I recently consolidated student loans and I wanted to know if this would help my fico score. I am more so interested in my mortgage scores than anything. Any feedback would help.

 

 

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calyx
Super Contributor

Re: Will consolidating student loans help to increase fico score?

Honestly, it will be bad in the short term (for the next 12 months), and no difference in the long term as far as scoring.

 

Mortgage scores are older algorithms and REALLY hate new account lines.  Consolidating the loans will just close out your old tradelines (which is not necessarily bad, they will remain for aging) and bring a new tradeline in at 100%.   The utilization on installment lines (loans) has a much smaller impact than utilization on credit cards, so that doesn't really matter.     As mentioned, it resets your "Age of Youngest Account" and could possibly drop your average age across threshholds (but that's very profile dependent).

 

The good news is that time heals all wounds, and your mortgage (and other) scores will recover.   

RIP:

F8 EQ: 809 | EX: 802 | TU: 805 | Accounts: 0/6 3/12 5/24
Happy practitioner of AZE7or8or9or10 | Team Finances > FICO
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