Does consolidating student loans hurt your credit score

Generally, your score is improved by having multiple types of credit, such as credit cards and different kinds of loans.

So if the installment loan you have is a student loan (which is the case for many student loan borrowers) and you fully pay off your student loan, then you have reduced credit diversity by eliminating that type of credit.

You're trying to give yourself the best options financially.

does consolidating student loans hurt your credit score-38

Each of the bureaus provides different data, so you really have three different FICO scores -- one using data from each bureau -- that can vary.

Why share all this confusing nonsense about credit scores and bureaus?

This, as far as I can tell, is the only way in which paying off a student loan early adversely affects your credit.

And so, if people are right in saying that paying off early can reduce your credit score, why do I say that shouldn't really matter?

so it's basically just like financing a fridge with equal monthly payments? FICO: "Yeah, a fridge." (Now I'm paraphrasing.) So, if that's the case, how and why would paying off an installment loan early adversely affect your credit?

The answer is this: what considered by FICO, and many other credit scores, is the diversity of your credit.

I'll say again that I think you should almost never hesitate to pay down student loans early because it might impact your credit.

I certainly won't bat an eyelash when I have that opportunity because I believe a potential impact on my credit score will be outweighed by saved interest and the satisfaction of fully paying off my student loans.

In fact, I'd go as far as to say that concern for your credit score should almost never prevent you from paying off your loans early, and paying early is likely to improve your score in some cases.

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