Consolidation confusion

[in the flood]

Just when I thought I was getting the hang of this fix-your-own-credit stuff, I think I may have made a big mistake.

I went to a mortgage broker a few weeks ago to find out about qualifying for a loan. She basically told me that I should start paying back my student loans (deferred until Nov.) because I don't have many open accounts and it will help my score to have a positive payment history.

I called my lender (Sallie Mae) and requested to start making payments. I also asked to consolidate my 5 small loans into one big loan with the total at slightly above $16k. For some reason I thought that I had read that it was better to have the loan under one big TL rather than a bunch of small ones.

Fine, so I did that, but tonight I pulled my EQ CR to start doing some serious repair, and I see "9 accounts in good standing," 5 of which are those small loans. Did I make a big mistake? It looked a lot better to personally see that my "good" accounts outnumber the bad, but as soon as my consolidation is processed, this will change.

Can anyone tell me if I've done something foolish or if it makes no difference whatsoever? Thanks so much!

[Cynic]

I see no reason why closing several good tradelines with age and a positive history and replacing them with a 1 new tradeline would help your score right away.

 

I think paying down your balances so the current balance is significantly lower then the high credit amount for each loan would help a lot more in the short-term. If you want all your loans combined on 1 monthly bill and 1 monthly payment they will do that for you...just request it. "Serialization" is what SLM calls that.

[blinky]

Look closely at those small ones and they will say closed or transferred to another lender. They will stay on your report for 7 years as history but they won't help or hurt. The biggest help with consolidating is the length of time you now have to repay and the fact that it is with one check. Also the % rate might be better also.

 

 

 

We also have a bank account with bill pay so I set up my loan payment to pay bi-weekly for about 20.00 dollars more each month(10.00 each payment) than a normal payment so that is taking it down a little quicker than doing the loan companies direct pay.

[TxQuiltGirl]

Consolidating the loans will probably bring your overall payments down - and that will help your DTI. If she told you it would help your credit score, she was wrong.

 

MOST brokers don't know what they're talking about when it comes to credit. The ones that are frequently here in the mortgage forum are the only ones I've ever found who actually understand the effects various actions can have on credit score.

 

Consolidation is a good idea, but don't look for an immediate jump in score.