Consolidating your student loan debt could be a good financial move, but only if you understand what you’re doing and the change can save you some cash. Here are some things you should know.
Check Your Score
You usually need to have a good credit score — anything 680 or above — to refinance student loans. So before you even start researching a refinancing option, make sure your score is as high as possible. You can do this by paying bills on time, not using too much of your credit and not opening multiple new accounts at one time.
Look Into the Company
You don’t want to refinance your loan with a company that has poor customer service. As CNBC reports, you should use the Consumer Financial Protection Bureau’s student loan lender database to search for companies with good track records.
Consider All The Options
If you can find a consolidation option that gets you fewer total payments at your current interest rate payments, that’s great. Fewer total bills means more savings. Even better, try to find an offer that will lower your average interest rate. Even a percentage point drop from your current loan could make things worth it.
Don’t Go Overboard
Don’t consolidate just to consolidate. Make sure you read through all the fine print of the new loan and it comes off as a positive move for you. Above all, make sure your new monthly payments are something you can easily handle. Paying down student loans is already difficult, there’s no need to make things harder on yourself.