How will consolidating my student loans affect my FICO score?

First, congratulations on your graduation! Next, kudos for doing your homework as you consider how such a change to your credit report might impact your FICO® score. Being proactive about your credit is the way to begin making smart financial decisions that will give you a solid foundation for years to come.

What should I be concerned about when it comes to consolidating student loans?

To protect your FICO score when consolidating debt, your main concern should be whether the consolidated loan will be established as a "new" loan, or simply an adjustment to one of your existing loans. A new loan appearing on your credit report with a recent date of opening can cause your FICO score to drop slightly. The good news is that if this happens your score can recover within a short period of time if current payments are being made on all accounts, credit card balances don't increase, and no other new accounts are opened. If, on the other hand, your consolidated loan amount is transferred to an existing account, there should be very little, if any, negative impact to your FICO score.

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myFICO is the consumer division of FICO. Since its introduction 20 years ago, FICO® Scores have become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use FICO Scores to make consumer credit decisions.

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