03.26.07 | A Lesser Known Benefit
A lesser-known benefit of federal loan consolidation is that it actually improves a borrower’s credit score. It’s true! Here is an explanation on how this benefit works.
Nowadays, most students need to take out a Stafford loan for every year that they are in enrolled in school to help pay for the cost of attendance. Each time they do accept the Stafford loan the school coordinates two disbursements for that academic year: one disbursement for the Fall and then the second disbursement in the Spring. If a student is in school for 4 years and accepts the Stafford loan each year those loans add up to 8 open balances on a credit report. One way to reduce the number of open accounts on your credit report is to consolidate these student loans. Once consolidated, rather than eight open balances on a credit report the computer will see eight loans paid in full and only one new consolidation loan. This is how consolidation improves your overall credit rating.
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I am a single mother and need to find a way to get some of my student loans forgiven. I have been teaching for 3 years. Thank you, Carole Cassidy
May 27th, 2008 | #
I have several fixed rate loans (5 Staffords & 5 C.A.L.s) of which the highest rate is 6.5%. Since several are in the 4 - 5.25% range, would it benefit me to consolidate with today’s rates?
August 28th, 2008 | #