Consolidating your student loan debt can do more than just reduce your long-term debt. The fact is that a consolidation can help you increase your credit score over the course of the loan. That, in turn, will help you buy a better car, get the home you want, or end up with a lower rate credit card. How, though, is it that a consolidation of student loan debt can help you raise your credit rating? Consider some of the credit rating measures used by the reporting agencies.
First of all, the more open accounts you have the lower your score will generally be. Over your student life, you will take out as many as 8 loans to pay for your education. Each of those is listed as a separate account with its own interest, payments, and principal. When you consolidate, you are closing those accounts down to one account. So instead of 8 open accounts, you have one. That right there will help you score.
Secondly, you will have lower payments after you have consolidated your student loans. When the reporting agencies figure your credit score, they do so by looking at what your minimum monthly payments are. Instead of having several payments per month for your student loans, you have one payment that is less than the sum of those old payments. Again, the consolidation helps your score.
As a final point, you are improving your debt to credit ration. When your score is figured, the reporting companies will check your debt by looking at available credit versus credit used. When you have more credit available, but less used (like when you consolidate student loan debt) then you are looking at a higher score. So, if for no other reason, consider consolidating to help your credit score.