Having lots of loans and debt is one of the biggest reasons leading to poor credit ratings. The larger your debts, the worse your credit rating and the more likely that you will find yourself with large monthly bills that are difficult to repay.
Consolidating your loans means that you take out one large loan to repay all your creditors so that you only have one large loan to repay. While the overall amount of the loan does not change - if you owed $20 000 to five different companies, you will still owe $20 000 but to only one lender - but the interest rates and monthly payments are usually quite smaller and this can help meeting your debt obligations much easier.
Debt consolidation can be an especially good idea if you have lots of high-interest debt and lots of bills that are hard to keep track of. One smaller monthly payment will be easier to remember and will help make bill time less painful.
Start building credit early - even before college starts, if you plan on taking out college loans. Ask your parents to sign over a bill that you pay on time each month. Get a credit card with a low limit and a bank account that you balance each month. Avoid opening several charge cards at once - not only will they be hard to repay, but having several new accounts when you have a short credit history will actually cause your credit rating to drop. Get a part-time job.
Each of these things can help you establish good credit, high in turn can help you get a good student loan rate. More importantly, establishing credit early will help ensure that you have a long (and good) credit history by the time you graduate from college, which will help you with all your important, large post-graduation expenses.
Whether you attend information sessions at the financial aid office, read about money in books, or meet with your bank’s financial officers, learning how to manage your money is an important part of school life.
For many students, their time away from home is one of the first times they are responsible for finances - including bills. Learning to handle this responsibility well early on in life ensures that you will enjoy a good credit standing your whole life. Learning about money will also help you prevent costly credit mistakes.
