Improve your Credit by Consolidating Student Loans

Most people consolidate student loans because of the incredible savings opportunities. However, there are even more benefits to consolidating student loans than many people realize, especially in the way of improving your credit or FICO score.

Student loans are usually awarded a little at a time, semester by semester. Over 4 years, a person can easily accrue 16 or more loans. This many open loans can really weigh down a borrower's FICO score. By consolidating student loans, these numerous loans are closed and replaced by a single, fixed rate loan.

The cost savings after consolidating student loans is often significant, greatly reducing monthly debt to income ratio. Because 30% of the score is based upon the amount of credit owed, reducing monthly payments can have a dramatic affect on a FICO score. Reducing debt to income ratio not only improves a credit rating, it also increases the limit that banks are willing to lend.

You can indirectly impact your FICO score by leveraging the amount saved from consolidating student loans and using it to pay down high interest credit card debts that eat away at your budget and drag down your credit score. A monthly savings of just $200 as a result of consolidating student loans can steadily chip away these nagging high interest debts.

Consolidating student loans is the first step in creating a healthy financial foundation for students finishing college and beginning new challenges. A good credit score can literally save tens of thousands of dollars on homes, autos, and other large loan purchases over a lifetime. Student loans and refinancing programs offer some of the most flexible options of any loan available on the market. Talk with a specialist today by phone or live chat to learn how to maximize all of the inherent potential of your student loans.