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Home Ask Student Aid FAQ Does private loan consolidation affect the borrower's credit rating?

Does private loan consolidation affect the borrower's credit rating?

Consolidation can increase or decrease the credit score or leave it unchanged. Consolidation reduces the number of loans, but is usually not treated as new indebtedness since it is replacing existing loans. If consolidation reduces the monthly payment through a longer repayment term, it may improve the borrower’s credit score by reducing the debt-service-to-income ratio.

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