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Q:
consolidating my undergraduate Stafford Loan

I am considering consolidating my undergraduate Stafford Loan with my wife's (we are almost six years out of college). For me, it's not about reducing the payment, I plan to make the same payments we make now, but I would like to reduce the number of bills I have to pay and, more importantly, lock in an interest rate. I'm wondering if you could comment on the impact that this sort of consolidation has on our credit rating. We currently have excellent credit, but are looking to buy a house in the near future and don't want to damage our rating. -Frank

Frank,

You are correct, consolidation rates are relatively low and it may be wise to take advantage. Please note that there are a few disadvantages to consolidating your loans into one. First of all, if one of your spouse were to pass away or become disabled (or if the marriage ended in divorce), you would be responsible for the entire loan amount. In addition, if one spouse would need a deferment, you would both have to qualify. That being said, the exact impact it will have on your credit is difficult to determine. Of course, the inquiry will appear and too many can send a "red flag" to potential creditors. Another possible cause of any impact may be that it will appear on your individual report that you have increased the debt amount (by adding your wife's debt to yours).
Good luck with your decision,

The Advice Team

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