Flickr user Peter Kelly
When you consolidate your student loans, it gets transferred into a completely new loan with a new account and a new lender. When this happens, your old loan account becomes redundant but it still stays on record as part of your credit history.
Federal Consolidation Loan & Credit Scores
If you check your credit report after having consolidated your loans, you will see the details of all your present and past financial accounts and transactions. Against your earlier student loan, which has now been consolidated, you will see a notification that says, ‘Account closed due to transfer’.
This is not uncommon and a notification stating ‘Account closed due to transfer’ is not necessarily a bad thing. By itself, it does not indicate a negative mark on your credit history and it will not have any negative impact on your ability to apply for any other loans.
Delinquency
However, if you have delinquent debt, your credit record will have a notification that says ‘Account written off’ or ‘Account charged off’. Either of these two notifications could have a negative impact on your credit record and your ability to borrow money in the future.
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