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Q) Does it make sense to pay off the smaller loans faster to reduce the number of loans? If you’ve got small loans and larger loans and you can knock out the smaller loans without compromising things like savings and emergency funds then go for it.
It will eliminate accounts that have balances, which is always a good thing for your credit scores.
Getting out of default status through loan rehabilitation has the effect of wiping off the defaulted loan from your record, unlike other methods of dealing with default.
Previous delinquencies remain on the record, but the default itself will be expunged.
The average age of your accounts, which is important to your scores, takes into account open and closed accounts equally.
As such, paying any loan off early (and then closing the account if it’s a credit card) has no negative influence on the average age of your accounts or your credit scores.
Q) Can paying off student loans early hurt your credit score due to the length of the loan? Paying off your loans early doesn’t have any impact on the age or “length” of the loan.
A loan opened 3 years ago is still 3 years ago regardless of whether or not it’s paid off, paid off early, or still unpaid.
The opinions expressed in his articles are his and not of or Intuit.
You may think you're in the clear because your student loans are out of default, but you can't be certain until you check your credit report.