Everyone has things about his college experience he tends to throw out
after graduation. Whether it was the pictures of the spring break in
Panama Beach or the textbooks you couldn’t sell back, we all have
things we want to put behind us as we head out into the work force.
Student loans however, no matter how small, cannot simply be
forgotten. Student loans were so easy to get in college, and so easy
to forget. Your first bill may arrive right after you graduate,
ushering in your new bill-paying, over-financed life.
You also may have a hard time paying off your loan if you're too busy
paying off the credit card you were given a t-shirt to apply for.
Luckily, borrowers now have the opportunity to receive some of the
best student loan consolidation fixed interest rates ever.
By consolidating, borrowers not only reduce their long-term debt but
also can help change their credit score for the better over time. An
improved credit score will be important when a person enters the
working world and wants a new car, apartment, or charge card. Here
are some tips for borrowers that can help them as they enter the job
More Open Accounts = Lower Score:
Over a borrower’s life, he may have taken out up to eight separate
loans to pay for school. Each of those loans has a different payback
amount, interest rate, and payment terms. The more credit and loan
accounts a person has open, the lower his overall credit score. Though
by consolidation, older accounts will be merged into a single account,
thereby lowering the amount of open credit lines on a credit report.
Lower Payments = Higher Score:
When a credit report is evaluated, the total amount of a borrower’s
monthly minimum payments is taken into account. When you have
multiple loans, each of the payments is part of a borrower’s monthly
payment obligation. Borrowers who consolidate have only one payment
to make, which is typically lower than the minimum amounts of the
Your Debt To Credit Ratio—It Matters:
Credit bureaus typically determine if you're in debt by evaluating the
amount of your available credit you actually use. If you have a total
of $10,000 available on three credit lines and you owe $2,000, your
score will be higher than if you have maxed out your one credit line
with a $2,000 limit. If a borrower has multiple loans with a maximum
used, it will reflect negatively on the person’s credit score. So it
is important to consolidate accounts in order to reduce the number of
open accounts being used.
Consolidation can help most borrowers in many ways, but rates won’t
stay low forever. They are so low now; the only place for rates to go
is up. If you are on your way out of school, you’ll need to save every
cent you can in this tough job market.