Does consolidating student loans affect credit score No login webcam chat masterbation

22 Mar

I can't speak for every situation, but I would think those savings are worth whatever impact on your credit score that removing loans from your credit diversity might have.

And consider what you're preserving a credit score for in the first place.

In fact, I'd go as far as to say that concern for your credit score should almost never prevent you from paying off your loans early, and paying early is likely to improve your score in some cases.

I think it is worth taking a minute to explain a little about credit scores in general.

so it's basically just like financing a fridge with equal monthly payments? FICO: "Yeah, a fridge." (Now I'm paraphrasing.) So, if that's the case, how and why would paying off an installment loan early adversely affect your credit?

The answer is this: what considered by FICO, and many other credit scores, is the diversity of your credit.

Generally, your score is improved by having multiple types of credit, such as credit cards and different kinds of loans.

So if the installment loan you have is a student loan (which is the case for many student loan borrowers) and you fully pay off your student loan, then you have reduced credit diversity by eliminating that type of credit.

Furthermore, according to FICO, the factor of "types of credit used" only accounts for roughly 10 percent of the score, whereas "amounts owed" corresponds to roughly 30 percent.

The second is that while the FICO score is the most common "credit score," different lenders may use other scores or even have their own models to check credit.

Therefore, my advice may not apply to every kind of credit score.

So I did a little research -- including a wild Saturday night poking around on the FICO Banking Analytics blog -- asked some of my very intelligent colleagues about it, and started monitoring my credit.

(I use Credit Karma because it pulls out the key factors that affect my credit, and it's free.) What I learned was that while paying off student loans early may, in some cases, reduce your credit score, the advice to "be careful about paying off early" is a little misguided.