Q: For a private student loan consolidation, will it matter if I have a bad credit score or will I need good credit for private student loan consolidation (as with regular private student loans)?
A: With private student loan consolidation borrowers are essentially replacing one private student loan with another. Just as the borrowers current private loan lenders took the borrowers credit into consideration before lending, private consolidation loans will also take a borrowers credit into consideration. By obtaining a private consolidation loan the borrower is receiving a new student loan in place of their current student loan(s), with a new set of terms. If the borrowers credit has significantly improved since the time when they were granted the original private student loans, the private consolidation loan could provide them with a better rate.
Typically, the main benefit to borrowers from student loan consolidation is lowering their monthly student loan payments. Those who are struggling to make their monthly payments, have the option of consolidation to help prevent slipping into delinquency or default. Borrowers should understand that along with lowering their monthly student loan payments, student loan consolidation may also increase the amount you will pay over the lifetime of the loan, since the repayment period may be extended to reduce the monthly payments, the borrower could pay more in interest charges.