question about student loan consolidation

[shams]

i got a bunch of student loans from different lenders, and i am still in school. i pretty much plan on paying all of the loans off in several lump sums as soon as i finish school, because i am not trying to pay school loans off for the rest of my life.

a friend of mine told me that his credit scored jumped like 40 points with each credit reporting agency when he consolidated his loans. i would definitely like to consolidate my loans now knowing this, but my credit scored is not in the best shape due to an identity fraud issue that i'm still fighting. with the exception of transunion, which my score is in the mid 500s, my other 2 scores are in the upper 600s. would i get rejected if i attempted to consolidate my loans due to my low credit score? and, if i am able to consolidate, which lender should i consolidate with?

 

[Temujin]

There are several good threads on student loans both on the main board and here I think. I don't see how JUST consolidating would increase your present credit score unless the accounts were delinquent when your friend consolidated.

Being that you don't have to pay back student loans until you graduate I would wait to consolidate until your credit improves. The better credit the better rate and with student loans that could be 10k difference. I consolidated my loans with salliemae. The only thing I would suggest is paying the interest on the loans now if you can afford it. Most student loan programs offer that option. It will reduce your total loan cost significantly.

You said you plan on paying them all off when you graduate. Personally I wouldn't suggest that unless you just have it like that. Only reason I say that is student loan debt is not bad debt to have. The interest rate is going to be lower then any credit card or mortgage. If you are looking at coming into a chunk of money at graduation you would do yourself better financially to go ahead and buy a home and carry less mortgage debt. When you consolidate after graduation many loan programs give you a bunch of federally mandated options to repay. They have graduated payment programs ballon payment programs automatic 6 month deferrals etc. Just research before you consolidate most student loan debt is guaranteed by the government so there are thousands of companies looking to take on your loan. Definetly find yourself the best interest rate and terms that you can make.

But if you plan on paying it all off after graduation don't waste time consolidating just pay the interest now and the rest at graduation. I don't see how JUST consolidating would increase your present credit score unless the accounts were delinquent when your friend consolidated.

 

[shams]

thanks for the response Temujin. in my friend's case, he stated that consolidating his loans into one loan made ability to pay back the loans much easier in the eyes of each credit agency. he was then able to buy a condo afterwards, when previously he wasn't before consolidating. i actually had no intention of consolidating for the same reason that you stated. i don't want to get trapped into an interest rate that could lower once we get out of this recession. once he told me how many points his score increased, i immediately considered consolidating because my credit score needs help. battling creditors over my identity fraud issue is taking much longer than expected.