Consolidating student loans and credit card debt
If the loan doesn’t offer monthly savings or reduce your total interest charges, you may be better off with another solution.
Explore the full range of solutions for credit card debt »Find more solutions for student loan debt »When used correctly, debt consolidation loans should improve your credit rather than hurt your credit.
Specifically, Federal Direct consolidation loans are unique.
But this is what you can generally expect: Credit card debt consolidation loans are the most common.
A consolidation loan pays off your balances in-full, so it’s good for your credit history.
It also improves your credit utilization ratio – the ratio that measures credit use versus total credit limit.
In order to qualify for any loan, Private student loan debt consolidation is also bad if you ever think you may need a federal relief option or loan forgiveness.
A private consolidation loan effectively converts federal student debt to private.
If you want to use a Federal Direct consolidation you can apply for it through
However, if you consolidate in the wrong circumstances and can’t keep up with the payments, default will hurt your credit.
You can also damage your score if you don’t keep up with the minimum payment requirements on your debts during underwriting.
For credit card debt and private student loan consolidation, your credit score doesn’t just impact loan approval.
It determines the interest rate you qualify to receive on the new loan.