Does consolidating loans hurt credit
Too many credit inquiries can be viewed as a sign that a borrower is experiencing a financial hardship and is therefore more of a credit risk.
However, shopping around for the best interest rates is considered a single inquiry by the credit bureaus, so in order to get the best deal.
Another factor that has a minimal effect on credit score is checking interest rates.
Generally speaking, checking rates causes a short-term drop in credit score.
With that much money at stake, worrying about what Equifax or Trans Union thinks seems a bit silly.
The one exception would be for borrowers who are looking to purchase a home in the near future.
One factor that determines credit score is the number of lines of credit that are open.
It shouldn’t come as a surprise that a record of debt repaid is a good thing.
If the credit score is high enough to qualify for a low rate or favorable repayment plans, then the credit score has done its job.
In many cases refinancing or consolidation can save hundreds of dollars per month and thousands of dollars per year.
This especially helpful for those trying to secure a mortgage.
It would be nice if consolidation or refinancing caused a predictable movement in score. In some circumstances, a borrowers credit score can drop.