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The main benefit of consolidating government-backed student loans is streamlining the payment process.The interest rate for your new consolidated loan will be based on what your past interest rates were and will most likely not be lower.By rolling medical debt into a debt consolidation loan or by paying for it with a low-interest credit card, you would have to pay the interest on new account—which in some cases could be more than the original rate.In 2017, the three major credit bureaus added a policy that gives consumers a 180-day grace period to resolve outstanding medical debt before it appears as past due on their credit reports.Credit counseling organizations are typically non-profits that exist to advise people on how to manage their money and establish budgets.
Your credit score is not considered for this program and borrowers that are up to date on their payments are eligible.
Payment history is the most important factor in calculating your credit score—accounting for 35% of your FICOWith a debt consolidation loan, it is important to first know what range your credit score falls into.
For people with a "poor" credit score it may be difficult to get approved for a new loan to use for consolidation.
When you consolidate revolving debt—like credit card accounts—you also will be working toward reducing your utilization ratio—one of the most important factors in calculating your credit score.
Your credit utilization ratio is calculated by comparing how much available credit you have and how much you use each month.
Debt consolidation has the potential to help or hurt your credit score—depending on which method you use and how diligent you are with your repayment plan.