If I consolidate my student loans, will it affect my credit score?

When you consolidate student loans, you will see a change in your credit score, but the terms of your consolidation will affect whether this change is positive or negative. To consolidate, you must pay off your existing debts with a new loan. This means you will have to prepay, and prepayment can be negative. However, if you have federal loans, there is no prepayment penalty. Some private lenders will additionally waive penalties with a student loan consolidation. In this case, your credit will go up. According to your credit score, you will have successfully paid off a bulk of your student loans at the time of your consolidation.

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