Students in the United States will find their student loans are consolidated differently than other types of debt, such as credit card debt. Loans that come from the government, or federal loans, are 100% guaranteed by the U.S. A federal loan is consolidated when a company that handles loan consolidation buys existing loans. The interest rate used for the consolidation is then determined by the year’s student loan rate as of May of the current calendar year.

Those who look into student loans consolidation will discover a wide range of potential interest rates. These rates can be as low as 4.7% or as high as 8.25%. Keep an eye on the rise and fall of interest rates, and then act accordingly to strike when the rates are low. You will benefit by having an affordable rate in place during the entire length of repayment of your school loans.

Loan debt consolidation is not an endless road of opportunity. You are allowed to consolidate once with a private lender, and then once more with the Department of Education. You have one chance to get it right, so do your homework. Be sure that you have researched all of the consolidation companies. Make it a priority to find the most reputable companies and the ones that offer the lowest rates.

People often refer to federal student loans consolidation as refinancing, but this is not entirely correct. With this form of loan debt consolidation, your loan rate will not change, regardless of how different your previous loans were. It will merely be set at a fixed rate. Keep in mind that all of your previous loans will be weighed to find an interest rate that is appropriate in light of the current rate. As with all aspects of financial matters, there are a number of elements that will affect the rate at which your interest is compiled.

For the many students struggling with school loans, student loans consolidation remains an appealing option. It is important, however, that students do their financial research, and be aware of the pros and cons of loan debt consolidation. It has its drawbacks: Monthly payments, although combined into one, will be extended over a greater period of time than if the student had not consolidated the loans to begin with. In spite of this, student loans consolidation can be invaluable for students struggling with payments, and its benefits lure more students every year.

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But a credit score carries much more weight than just the types of loans we can get and the terms of those loans, but also affects our ability to get the job we have been training for, the amount that we are charged for insurance, or even our ability to qualify as a tenant/renter of a decent apartment. Yes, the credit score is a powerful force in many aspects of our lives and can follow us around like a criminal record for years, wreaking havoc and allaying well-formed plans.

Credit Report or Credit Score? Which Matters? Both!

You may think of your credit score and your credit report as one in the same. Not true. While your credit report is a detailed accounting of your credit history, current account information, balances, delinquencies, defaults, bankruptcies, and other identifying personal information, your credit score is much more. Your credit score is a three digit number that is assigned to you as a borrower based on the information that is contained in your credit report. A special mathematical formula is used to determine a number from 300 to 850 that creditors and potential lenders can use to judge your potentiality as a good borrower.

What Your Credit Score Really Means When Getting a Loan

As you might well imagine, those borrowers who have a low credit score have a hard time finding a finance company, bank, credit union, or other lender who will extend money on their behalf. The same is true when those with less than stellar credit try to open up a credit card account. Your credit score can cause you not only to be offered credit products and loan products that are more expensive in terms of the interest charges that you will pay for the credit extended or money loaned to you – you may also have to pay more exorbitant fees and qualify for lesser amounts than borrowers with good credit.

Dreaming of Home Ownership? Not With Bad Credit!

If your credit score is below 700, your chances of getting approved for the icon that is synonymous with the American dream (a home mortgage) are slim to none. Perhaps of all the negative outcomes of bad credit, this can be the most devastating. Many folks are finding that, due to recovering from bad credit, they are often in their forties before they qualify for a starter home. That can be devastating to families raising children.

Want to Work For NASA? Better Pull Your Credit Report First

Although there are good, hard-working people with horrible credit, more and more companies and even the government are now requiring that you have a certain credit score to be eligible for employment – which must be determined in pre-employment screening. Credit card giant Visa even uses the fact of the credit check prior to being hired that most companies now require on its website, proclaiming, “When you’re ready for a REAL JOB you’ll be glad you have a good credit score.” Yes, the credit check is performed alongside the typical background screening, reference check, and drug screening. Employers claim to be able to judge the trustworthiness, reliability, and character of the candidate by looking at this type of information, and oftentimes a candidate with superb skills but bad credit will be rejected in favor of a candidate with lesser skills and better credit.

Auto, Home, and Life Insurance Costs More for Those with Credit Problems

Another punishment that is afflicted on those whose poor credit score follows them around like a shadow is that insurance companies charge higher premiums for the automobile, home, and life insurance coverage that they need. In fact, insurance companies create what is called an “insurance score”, based on your credit score, but factoring in your previous driving record and the length of time you have been insured with your previous carrier. So not only will you pay more to drive that new car off the lot, you’ll also pay more to keep valid insurance on it as well.

Tenants Forced to Live in Less Appealing Accommodations Due to Bad Credit

As anyone who has been “apartment shopping” lately can attest, there is tons of red tape to cut through when you rent an apartment that is decent enough to live in. This red tape also includes a check of your credit score. Landlords insist that by checking potential tenants credit scores, they can determine whether the tenant will pay their rent on time and take care of the apartment or home they are renting – and this also gives them a means to check on any previous problems that the potential tenant might have had with previous rentals. Many folks with derogatory credit files and low credit scores can only find housing in neighborhoods that are unsafe for their families and may be a long commute from their workplace.

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The main advantage of doing this is that instead of making several monthly payments, only a single payment is made every month that may be reduced although this will cost one in terms of higher interest amount paid because the single loan may be for a longer period of time.

There is a way to secure a lower interest rate. The private student loan is based on the credit score. If the credit score has improved by 50 to 100 points due to the fact that you have graduated and have a job, then you will be rewarded with a low interest rate.

Another way of getting a better deal when considering a private student loan consolidation is to talk to the holders of your debts. They may be willing to negotiate with you and cut down your interest rate so that they can keep you as their customer.

This type of loan also incurs the same interest that the home equity loan has. You can have a home equity loan at a fixed rate, thus locking in the low interest rate. However sometimes a variable rate looks attractive as long as you can watch it and lock it the moment it is on an upward trend.

Study carefully the terms of the agreement. Find out if the interest rate is variable or fixed. Ask also about fees and if there are prepayment penalties. Find out how much they are for each of the following lenders. Write them down so you can get the best deal from among the following list and whatever other companies willing to do the private student consolidation loan with you:

Key Education Consolidation Loan – $75,000 maximum for non-key debt, $7500 minimum, 10, 15, 30 year repayment term, no prepayment penalty and no fees

Citi Student Loans – $75,000 maximum, $7500 minimum, choose fixed or variable rate, up to 30 year term rate, rate reduction after 48 monthly on time payments, no prepayment penalty

Study carefully the terms of the agreement. Find out if the interest rate is variable or fixed. Ask also about fees and if there are prepayment penalties. Find out how much they are for each of the following lenders. Write them down so you can get the best deal from among the following list and whatever other companies willing to do the private student consolidation loan with you:

Key Education Consolidation Loan – $75,000 maximum for non-key debt, $7500 minimum, 10, 15, 30 year repayment term, no prepayment penalty and no fees

Citi Student Loans – $75,000 maximum, $7500 minimum, choose fixed or variable rate, up to 30 year term rate, rate reduction after 48 monthly on time payments, no prepayment penalty

Study carefully the terms of the agreement. Find out if the interest rate is variable or fixed. Ask also about fees and if there are prepayment penalties. Find out how much they are for each of the following lenders. Write them down so you can get the best deal from among the following list and whatever other companies willing to do the private student consolidation loan with you:

Key Education Consolidation Loan – $75,000 maximum for non-key debt, $7500 minimum, 10, 15, 30 year repayment term, no prepayment penalty and no fees

Citi Student Loans – $75,000 maximum, $7500 minimum, choose fixed or variable rate, up to 30 year term rate, rate reduction after 48 monthly on time payments, no prepayment penalty

Educated Borrower Private Consolidation Loan – $300,000 maximum, $7500 minimum, up to 30 year repayment term, no prepayment penalty and 0 to 5% origination fees

Sallie Mae Private Consolidation Loan – $275,000 maximum, $5000 minimum, 15 to 30 year repayment term, choose between fixed and variable rate, no prepayment penalty and no fees

SC Student Loan – PAL Consolidation Loan – $150,000 maximum, $5000 minimum, 10 to 30 year repayment term, choose between fixed and variable rate, no prepayment penalty and no fees

Next Student Private Consolidation Loan – $300,000 maximum, $7500 minimum, up to 30 year repayment term, no prepayment penalty and 0 to 5% origination fees

Make sure when you are considering to go this route that you clarify all the terms of the agreement as the above may have changed and that all are put in writing and signed by both parties. The best one is the one that fits your needs. There you have some of the possible lenders and the other options when considering to do the private student loan consolidation.

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