Improve your credit by consolidating student loans

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<h1>Improve your credit by consolidating student loans</h1><strong> Author: <a href='http://www.articleseen.com/profile_Sumi.aspx'>Sumi</a></strong><br /><p>"At first thought, a student loan consolidation loan might seem the perfect solution for all your financial problems. Though it can help solve most of you financial145 worries, it might not be the right option for you. Needless to say that there are many benefits of opting for student loan consolidation loans and the positives might lure you into choosing this option without a proper thought. The advantages include ease of maintaining and keeping track of your loan, having lower monthly payments and no penalty if you pay off the loan earlier than the specified time. Also if you compare student loan consolidation rates, they will be lesser than any other loan type. However choosing and opting for a student loan consolidation loans should not merely depend on these factors alone. You must also look at how it will benefit you in particular. For example if you have already paid off a major chunk of you loan amount, then this option might not suit you. Or if you compare student loan consolidation rates with that of your existing loans and they are on the higher side, then it makes no sense for you to choose this option. You must carefully discuss all the pros and cons with a consolidation advisor at your local student loan consolidation services provider. Many people also believe that a loans consolidation loan will also improve their credit score. To better understand how a loan consolidation actually affects your credit score, you must first understand how credit score is calculated. If you know your credit score you will know, even before applying for a loan or credit card, if your application will be approved. A credit score is basically a scoring system developed by the Fair Isaac Corporation of Minneapolis also known as FICO. This score is calculated after taking many different things into account and gives a score anywhere between 300 and 850. The higher the score the better your chances of getting that loan or credit card. 35% of your score comes from your payment patterns of the past. Almost 30% comes from the amount that is owed by you to other financial institutions. 10% comes each from number of accounts and credit enquiries that you have, types of credits and loans that you have (a mix of loans and credits is always better). The last 15% is taken from your credit history length. If everyone knows what goes behind making a credit score, they can be conscious of how they use their money early on and hopefully get a good credit score when they need it the most. So does consolidating your student loans actually improve your credit score? This question cannot be answered in isolation. We must look at the total picture to see what consolidation actually does. Usually consolidating loans does not have any bearing on your credit score. If you however, make timely payments of your consolidated loans as compared to when you had many loans, you credit score will improve considerably. If you close your oldest accounts and you old credit cards with the help of consolidated loans, then your credit score will suffer. This is so, because your entire credit history goes with this closure. Further if you spend more with your new ‘no limit’ credit card you only add fuel to the fire and damage your credit score even more. Thus, even after consolidating your loans, you must be very careful as to how you use the new loan or else you will only hamper your credit score and limit your chances of getting a future loan. " </p><strong>About the Author:</strong><br />Discover the best <a rel="nofollow" href=” http://discoverstudentloanconsolidation.com/student-loan-consolidation-interest-rates/” title=” Student Loan Consolidation Interest Rates”> Student Loan Consolidation Interest Rates</a> and <a rel="nofollow" href=” http://discoverstudentloanconsolidation.com/student-loan-consolidation-program/ title=” Student Loan Consolidation Program”> Student Loan Consolidation Program</a> at my site. <p> Article Source: <a href='http://www.articleseen.com/Article_Improve-your-credit-by-consolidating-student-loans_57451.aspx'> http://www.articleseen.com/Article_Improve your credit by consolidating student loans_57451.aspx</a></p>

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Category : Finance : Loans