Consolidation vs bringing current

Hi, Im wondering when it is better to consolidate vs just bringing account current. A little background: My student loan delinquencies were - 9 accounts with (2) 90 day lates each; one 90 day late from 12/2013 and one from 10/2014. In 9/2020 EQ and EX dropped the 2013 late and 10/2020 TU dropped it. I didn’t see a score increase in 2020. Fast forward to 7/2021 EX and EQ dropped the 2014 late. Since TU hasn’t updated, it probably will drop next month. I actually closed these 9 accounts and consolidated them into new loans a few years back. Now that I know a little more about credit, I’m wondering what was the benefit? I didn’t want an early exclusion because these are some of my oldest accounts and I wanted to keep the history because the overwhelming majority of it is good payment history. I didn’t have a charge off. The consolidation caused my interest to capitalize. My current loan is paid on time, but it’s newer bringing my aging metrics down. So my question was there a benefit to consolidating and staying with the same servicer? I didn’t even get a lower rate. I’m thinking this may be a point to address in the primer? It could possibly help others. @LaHossBoss

Kkboom wrote: ↑Mon Jul 05, 2021 11:28 am Hi, Im wondering when it is better to consolidate vs just bringing account current. A little background: My student loan delinquencies were - 9 accounts with (2) 90 day lates each; one 90 day late from 12/2013 and one from 10/2014. In 9/2020 EQ and EX dropped the 2013 late and 10/2020 TU dropped it. I didn’t see a score increase in 2020. Fast forward to 7/2021 EX and EQ dropped the 2014 late. Since TU hasn’t updated, it probably will drop next month. I actually closed these 9 accounts and consolidated them into new loans a few years back. Now that I know a little more about credit, I’m wondering what was the benefit? I didn’t want an early exclusion because these are some of my oldest accounts and I wanted to keep the history because the overwhelming majority of it is good payment history. I didn’t have a charge off. The consolidation caused my interest to capitalize. My current loan is paid on time, but it’s newer bringing my aging metrics down. So my question was there a benefit to consolidating and staying with the same servicer? I didn’t even get a lower rate. I’m thinking this may be a point to address in the primer? It could possibly help others. @LaHossBoss @calyx

@Kkboom yes I think this would be an important discussion in the SL Primer. If my understanding is correct of what you’re saying, I don’t think you realized any benefit and probably received detriment. Let’s catalog the changes. First you added tradelines to CR, second you changed the # of AWBs on your report, lowering for the ones you consolidated and increasing by one for the new loan. Your aggregate B/L likely rose, but I can’t be sure of that depending on your situation. But I’m sure after consolidation they were at 100% whereas before I don’t know. You lowered your average age of accounts. You lowered your average age of installment accounts. You probably lowered the age of your oldest open installment account (on the bureaus and versions that track that). You lowered your average age of open installment accounts (on the bureaus and versions that track that). Whether you had kept the loans open or consolidated, either way the lates would’ve dropped off after ~7 years. The difference is, you wouldn’t have affected your ages and possibly raised your Installment B/L. As a matter of fact, you have a better chance of the tradelines remaining longer if they were open. Because they definitely shd not drop while they’re open, but once they’re closed who knows when they’re going to drop. And when they do, they’re going to hurt your aging metrics more. So in sum, imho, since you didn’t get a better interest rate or obtain any benefits from the consolidation, I think the detriments outweighed any potential benefits, but there may be more that I don’t know to the story. And I definitely wish I could tell you something good about it, but I’m gonna tell you the truth when it’s good and bad and like you said, hopefully it will help others in the future.

@Kkboom since these were not defaulted SLs amd only had lates, there was no possibilty of Early Exclusion, anyway. The TLs would have not been removed and you cannot EE lates on an otherwise positive account. You would have just had to wait out each late aging off one by one (EQ & TU) or if you had string(s) of lates they would have all dropped at once (EX only). Fortunately for you, the old loans were not deleted, anyway. Some US Dept of ED servicers will delete the TLs once consolidated! Which would have been the worst outcome and what you were trying to avoid in the first place. Since they were not deleted they should remain 10yrs post close or 10yrs post last update (sometimes for EX and EQ). Consolidation does nothing unless you opt to refi your loans privately for a lower rate. Consolidation of Fed Loans within the Fed Loan universe will never lower your interest rate, it will just average it to keep it the same. There are only 2 times when you should consolidate: 1: if you have older non-Direct loans that require consolidation into Direct loans to be eligible for a certain repayment program 2: you have defaulted on your SLs for a second time. It is the ace in your sleeve for when you have already rehabbed once and it is no longer an option, you can still at a minimum consolidate (while many less benefits than rehab, if rehab is not an option, it is certainly better than garnishment, etc.)

Good information above, @LaHossBoss !

Yes rehab vs consolidation for the SL Primer @LaHossBoss !! Awesome info!!

Thank you @LaHossBoss . Now that you mention it, I think they did mention I had older non direct loans and they changed them so I could change my repayment program. My bad…I still think it didn’t end up working out, but at the time it made sense.