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About 10% of Americans moved within the country last year, according to the U.S. Census Bureau. Though that number may seem small, its actual value is not—that amounts to an estimated (and whopping) 32 million people.
Within that group, the impetus for moving varied, from people moving in order to establish their own household, opting for a more affordable home or moving for a new job.

While the prospect of a new home can be exciting, the move itself can require a surprising amount of time and money. Unless you have a family or friend group ready and willing to pack your things, haul your boxes, and load your belongings into your new space, chances are you will hire a professional moving company to assist you with the above tasks.

Just as you make a weekly or monthly budget in order to see your finances clearly, it can be helpful to crunch the numbers on the cost of a move before you get started. One question worth considering before you cross hire movers off your to-do list is, how much do professional movers cost?

The short answer is—it depends. There are a variety of factors that will influence the cost of hiring professional movers. Below is some information that might help you prepare mentally and financially for a big move.

Making a Local Move

While moving across town might seem straightforward, it can be a drawn-out process—though a more affordable one—if you’re doing some of the legwork yourself. Keep in mind that unless you’re taking vacation days to pack and move, you may be filling boxes on nights and weekends for a while.

The upside of packing (and later unpacking) your own stuff is that you’re paying zero dollars to a moving company for those hours. That means you need only need a standard moving service. Once your boxes are taped up and ready, a moving company can come to load boxes and furniture into a truck, transfer them to your new neighborhood and unload them into your new space.

Costs for a standard move like this will depend on a few key factors, including the amount of stuff you have, the distance you are moving, and the number of hours it takes movers to move your things. (Because quantity matters here, it can be a good idea to use a move as the impetus for donating things you no longer want or need.)
To get an idea of how much movers cost for a local move in your area, gather estimates from a few companies. Most offer a free quote, and there are websites like QuoteRunner that aggregate moving quotes for local companies based on a few moving details provided by you.

By comparing the prices of local movers, the Unpackt Blog estimated the average moving price for a standard move in various cities. In each location, the blog shows how the size of your current home impacts the cost.

In New York City, for example, a local standard move for someone in a large one bedroom might cost around $350, while a four-bedroom move could cost more than $1,000. Keep in mind this is simply transporting packed boxes from Point A to Point B. The blog gathered moving data and estimated local costs for cities such as Raleigh , Baltimore , and Minneapolis .

A full-service move includes a good deal more assistance from your moving company, but for a greater price. The higher price is because this service covers just about everything.

You can opt to have your movers pack your things, disassemble (and later reassemble) all your furniture, load and unload everything, then unpack it for you, with your guidance as to where things go. Full-service movers also usually take care of packaging supplies and their disposal.
According toMove.org , the cost of a full-service local move will range between $550 and $12,000. Again, the price range varies so greatly because it depends on the number of belongings the movers will be packing and transporting.

It might help to compare and contrast a few different moving companies, Moving.com suggests reviewing at least three. This can help you make the best pick for your move and budget. Some movers will tell you a cost per hour for moving, but it can be hard to estimate just how many hours a full-service move will take since so many processes are included.

An additional note for your budget: Consumer Affairs says that tipping movers is customary, so maybe plan to tack on an additional $20 to $40 per day, per mover. So if you’ve got three movers helping you across two days, gratuity could range from $120 to $240.

Moving Out of State

The American Moving and Storage Association (AMSA) found that about 650,000 Americans use professional movers for an interstate move—that means they leave one state for another.

Some of those folks—about 39% of them, actually—don’t pay for their own moves, thanks to corporate sponsorship, which sometimes foots the bill if you’re moving for a job. About 44% of interstate moves are paid for by individuals. Military and other government-sponsored moves make up the rest.

If you’re an individual moving to a new state, know that your moving costs will likely depend on three primary factors, similar to a local move: the weight of your shipment, the mileage your belongings will be transported, and labor costs outlined by the moving company you’ve chosen.

Free cost calculator City to City can help you estimate your move. Users enter their Point A and Point B, and can also select premium services to see how that impacts price.

For example, using that calculator, a move from Los Angeles to Denver—about 830 miles—with about 3,500 pounds of belongings and including packing services might cost around $2,500.

A move from Los Angeles to Chicago—about 1,750 miles—with the same specs might cost around $3,300 miles.
Keep in mind that the weight of your belongings may need to be altered. Some say to estimate that each furnished room in your house contains weighs about 1,500 pounds.

Financing a Move

If you already have a clear picture of your personal budget, it may be simple to tell whether you need to do more of a do-it-yourself move or if you can spring for a full-service move through a professional moving company.

Some people might opt to use a credit card to pay for moving fees. If you go this route, consider keeping your card interest rate in mind. If you can’t pay off your incurred moving costs fairly quickly, remember that interest will rack up, potentially making your move more expensive in the long run.

Another way to pay for a move is with an unsecured personal loan, which may come with a lower interest rate than your credit cards. You can check your interest rate for a personal relocation loan through SoFi online and within minutes.

If you qualify, this loan gives you access to cash (usually in less than a week), which may come in handy if your mover offers a discount for an up-front cash payment. You can also use a personal loan to help pay for other moving-related costs that can come up, such as first and last month’s rent for a rental unit.

Ultimately, a move can be a fresh start and offer a new perspective on life. Paying for that fresh start in a way that best suits your budget can help make this life transition go smoothly.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOPL19062

Illness and injury are an unfortunate (and scary!) fact of life, but once you’re patched up after surgery or a lengthy hospital stay, you want to focus on your recovery, not worrying about how on Earth you’re going to pay off any medical debt.

Medical debt can be overwhelming, and according to a 2018 study published by Health Affairs, it’s not just older Americans who are managing debt from medical bills.

It is actually Millennials who are racking up the most medical debt—11% of all people who had a medical bill go to collections in 2016 were just 27 years old. So how can you pay off medical bill debt and hopefully stay out of collections? There are several different options available that may help you manage your medical debt with minimal pain, so you can focus on feeling better.

Before we dive in, we should mention we realize the nature of medical debt is often very sensitive. These strategies are merely a collection of tips and commonplace ideas found through our research on the internet.

This article shouldn’t be considered advice in any sense; every person’s situation is unique, which means it’s always a good idea to check in with a professional before taking action yourself. With that said, let’s dive into what we found.

Medical Debt Payment Plans

Medical care can be expensive, especially if you’re facing a chronic condition with ongoing costs or a major surgery or hospital stay. One plan of action you might consider is contacting your medical provider to see if they offer payment plans.

Some providers offer payment plans that allow you to make payments on your medical bill over time, paying it off in installments. Talking to your healthcare provider or a hospital billing department can be a great first step to figuring out if there is a payment plan you can take advantage of when it comes to medical bill debt.

Of course, one major downside to payment plans is that not all medical providers or medical offices offer payment plans and may require full payment when services are rendered.

Likewise, some medical providers may only let you set up a payment plan in advance, which means that a payment plan might not be a solution for any medical debt you’ve already accrued. And of course, some payment plans may still be too prohibitively expensive to pay every month, even if you’re paying over time.

Using A Medical Credit Card

If you’re looking at a medical bill that you can’t pay out of pocket, you may be tempted to reach for a credit card. Before you hand over whatever card is in your wallet, you might want to consider looking into credit cards specifically designed to be used to pay for medical care.

Medical credit cards sometimes offer low or no interest for a predetermined period of time, which means that you may be able to pay your medical bill with the credit card and then pay off the card before it accrues interest.

But be careful—if you can’t pay off the credit card before the interest-free period is over, you might face high-interest charges, which could actually end up making your medical bills more expensive.

Consider pulling out the calculator and doing some math to see if you can afford to pay off your medical bills during the interest-free period before you decide to put the costs on a medical credit card. This can help you determine how useful a medical credit card might be in your specific situation.

Negotiating Directly With The Hospital

If you’re facing a big bill from the hospital, one thing to consider is reaching out directly to the hospital billing department to see if you can negotiate the total amount of your medical bill.

While it’s not precisely like haggling for a used car, most hospitals have a financial department that might be able to help you determine if you qualify for any cost deductions or discounts.

One other thing to keep in mind is that cash might just still be king. Some hospitals and medical providers might give you a discount just for paying in cash. This can be a good option if you can afford to make the payments in one lump sum and want to avoid any extra fees.

Taking Out A Personal Loan

Taking out a personal loan might also be a solution to managing medical debt. While personal loans are often overlooked, they may offer more benefits than credit cards, like lower interest rates and more flexibility.

In order to use a personal loan to pay off medical bill debt, you’d borrow money from a lender which you’d use to pay your medical debt, then you’d pay that money back to the lender over time in regular monthly payments. Like other types of loans and financing, lenders generally look at your personal financial history and ability to repay (among other factors) when deciding if you qualify for a personal loan and determining your interest rate.

Unlike other types of financing, however, a personal loan can be used for almost everything—from paying off a hospital bill to paying for your groceries while you’re out of work due to an injury or illness.

If you’re wondering how to clear medical debt from multiple sources, a personal loan might help. You may be able to use a personal loan to consolidate numerous medical debts into one monthly payment. This could work by taking out a medical loan and using it to consolidate different medical bills, which allows you to focus on paying off just one debt instead of managing multiple varying deadlines every month.

When searching for personal loans to pay for medical debt, be sure to read the fine print. Some providers may charge origination fees to process your loan, or prepayment fees if you pay off your loan early.

Also be wary if interest charges in your search, as high-interest charges could add more money paid over the life of the loan.

One other potential benefit of using personal loans is that the application process is relatively simple and you can usually find out your eligibility pretty quickly. With SoFi personal loans, it just takes a few minutes to check your rate. And with SoFi, there are no fees required.

There’s no way around it—medical bills can be hard to deal with. But making a plan for repayment you help you get on your way to financial and physical wellness.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOPL19042

Scary, but true. The amount of student debt in the United States is approximately $1.5 trillion , about one-and-a-half times what Americans currently owe on their credit cards. People use credit cards for home repairs, to go on vacation, to buy groceries, to eat out at restaurants—and for just about any other expense you can think of. Yet, all of these purchases combined are dwarfed by our country’s total student loan debt.

Student loan debt is now the second biggest form of debt in our country, only behind mortgage loans—and the debt balance and its accompanying crisis continues to grow. In this post, we’ll delve into what impact this situation is having on the millennial generation (and other borrowers). We’ll also reverse engineer the reasons why this debt crisis is taking place and share strategies to help whittle down student loan debt, maybe even paying it off more quickly.

National Student Loan Debt and Its Impact on Borrowers

A recent study shows that millennials who have student debt have a net worth, on average, that’s 75% less than those without student debt (an average of $29,087, compared to $114,376 for those who are loan-free).

Students with loan debt also tend to have, when compared to their peers with no student loan debt:

•  about half as much money in the bank ($5,500 versus $10,180 )

•  approximately $19,000 less in their retirement accounts ($21,160 versus $39,905 )

•  larger mortgages—and on homes with less value

In short, financial wellness of millennials with student loan debt is clearly substandard, overall, when compared to others in their demographic without this debt. And, although people with college degrees tend to get higher-paying jobs, overall, the weight of the student debt that often accompanies it can drag down a person’s ability to gain financial wellness.

Here’s another statistic to consider: in an era when total student loan debt has surpassed total credit card debt, millennials with student loans also have more credit card debt.

•  55% of those with student loans also have credit card debt ; only 32% without education-related debt do.

•  Their average balance is $2,888 compared to $1,476 for graduates without student loan debt.

A Forbes article looks at the “disastrous domino effect” created by student debt, with one couple sharing how their debt is forcing them to “put their lives on hold year after year.” It’s had a negative impact on their marriage as they focus on paying down debt, and as they’re waiting to have children and buy a home. This debt has been a “huge burden and point of contention.”

Related: Will There Ever Be a Student Loan Bailout?

The borrower being quoted was a participant in a 50-state survey, Buried in Debt , of student loan debt and its impact on borrowers.

This report examines how the unrelenting stress of student debt can strain borrowers financially as well as emotionally. One of the participants shares how she regularly thinks about selling everything she owns to live in her car so she can put more money towards her debt.

Conclusions from the report include:

•  Nearly 90% of borrowers surveyed struggle to make payments.

•  The majority have less than $1,000 in their bank account.

•  6% of them have even had Social Security payments or wages garnished.

•  Nearly one third of them say their student loan bill is higher than their rent or mortgage payment.

•  65% say it’s higher than their entire monthly food budget.

More About the National Student Loan Debt Crisis

The amount of U.S. student loan debt continues to grow, increasing by 170% in just 10 years’ time . You read that right: over the last 10 years or so, the amount of student debt (in real dollars!) nearly tripled, which may lead people to believe we’re in the midst of a student loan bubble, similar to the subprime real estate bubble from a decade ago.

In June 2018, NASDAQ.com published Safehaven’s prediction that the student loan bubble is about to pop, and the article also shares how, earlier in 2018, the chairman of the Federal Reserve stated that this student loan increase could “slow down economic growth.”

Why this Debt is Growing

In part, the total student loan debt is growing because the costs of getting an education are still rising beyond the rate of inflation. In fact, over the last 10 years, the published costs of in-state tuition and fees at public universities increased at an average of 3.1% beyond the rate of inflation.

And, as long as the cost of attending college outpaces the cost of living, problems will continue for borrowers. Plus, the housing market crash of 2008 has also fed into today’s student loan debt crisis. That’s because some parents who’d planned to borrow against their homes’ equity to help their children attend college often couldn’t do so, post-2008. So, these students needed to take on debt of their own. More specifically, some economists suggest that, for every $1 drop in home equity loans, there has been an increase of 40 to 60 cents in student loans.

Even more alarming, analysis by The Brookings Institution estimates that, by 2023 (just a few short years away!), nearly 40% of student borrowers may default on their loans.

Paying Down Student Debt More Quickly

If possible, you could consider making an extra payment annually toward your loans’ principal balance. Can you do this twice a year? Every quarter? Paying extra toward your loans can help you get them paid off more quickly.

If that strategy is too much for your cash flow situation, you could always try figuring out how much you could increase your monthly payment beyond the minimum. Even if that doesn’t seem like an option right now, you can continue monitoring your financial situation and taking advantage of when you can pay more to your debt balance.

It can also help to create or review your monthly budget to see where you can cut back on expenses. For example:

•  How many paid apps, monthly subscriptions, and so forth do you have automatically deducted from a bank account or put on a credit card? Do you use them enough to justify their prices? There are even apps that help you can cancel unnecessary subscriptions and more.

•  When is the last time you shopped around to make sure you’re getting a good deal on your car insurance, enter’s insurance, or cell phone plan? How much could you save if you switched to a less expensive plan, and would the coverage still be as good?

•  What discretionary spending can you reasonably live without?

What would happen if you put those “found” dollars onto your student loan balance?

Refinancing Student Loan Debt with SoFi

If you’ve ever consolidated, say, balances from multiple credit cards into a personal loan, then you already know how much more convenient it can be to have one monthly payment. And, if you can get a lower rate on your new loan, you could also pay less interest over the life of the loan—depending on your repayment term.

The same is true when you refinance your student loans. It isn’t unusual for students to have taken out multiple loans for their education, and consolidating them into one loan with one monthly payment and a potentially lower interest rate might help them manage their repayment.

At SoFi, we allow you to refinance federal and private loans. We do, however, recommend that you explore the repayment benefits you can receive with federal loans, such as forgiveness programs or income-driven repayment plans, before refinancing. You’ll lose out on those benefits when you refinance with a private lender, so it’s important to be sure you won’t want to take advantage of any federal loan benefits either now or in the future.

When you refinance, you can opt for a fixed or variable loan and potentially select a more favorable loan term. If you are currently struggling to make your monthly student loan payments, it might make more sense to choose a longer term—though this can mean paying more interest over the life of the loan. Alternately, if you refinance to a shorter term, you could pay your loans off earlier, potentially paying less in interest.

In just two minutes, you can find your rate online and see if you qualify for SoFi student loan refinancing.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

SOSL18227

If you’re facing student loan debt, adding those monthly payments into your budget can be overwhelming—and for some, it can be a serious struggle to meet the monthly minimum on loan payments.

Of course, to simply stop making payments is pretty much the worst thing you can do. Before you go that route, there are several other options to consider—and the sooner you move to get back on track, the better.

One of the more popular alternatives for federal student loans—chosen by thousands of borrowers each year—is to just press pause by requesting deferment or forbearance . But that postponement isn’t necessarily the best choice for everyone.

The appeal is obvious—both deferment and forbearance offer a chance to catch your breath and protect your credit when you feel as though you’re drowning in debt. A recent Brookings Institution analysis found that nearly 40% of borrowers could be in default on their student loans by 2023.

The main difference is that with a student loan deferment, you may not have to pay the interest that accrues on certain types of federal loans during the deferment period. With a forbearance, no matter what type of loan you have, eventually you’ll be responsible for paying the interest that accrues.

Either way, the relief is only temporary: Unless you’re deferring your student loans because you are going back to school, enrolled at least half-time, there are limits on how long you can postpone paying your federal student loans. And in the meantime, there could be consequences to your current and future finances.

For example, when the loan is in deferment or forbearance, interest may accumulate on your loan balance and capitalize on the principal at the end of the deferment or forbearance period. This could ultimately mean paying more in interest over the life of the loan, which could take away from money you’d rather put toward a car or house.

How Does Student Loan Deferment or Forbearance Affect Your Credit

A number of factors determine your FICO® credit score , including payment history, how much you owe, how long you’ve had your debts, what your credit mix looks like and how much new credit you’ve asked for lately. Each factor is weighted differently, with payment history being the most important, making up about 35% of your FICO Score.

Though your loan status will be noted on a credit report , putting your federal student loan into deferment or forbearance shouldn’t directly affect your credit score, unless you miss a payment before your deferral or forbearance is granted.

But your total debt load likely will be reflected on your credit report—and if you aren’t paying it down, it could keep your score lower than you’d like. Just as defaulting can crash your credit, making monthly payments can help you build a positive credit history.

And your credit score isn’t the only thing new lenders look at when they’re deciding if you pass muster. Though education debt may be viewed more favorably than, say, credit card debt, because it can be regarded as an “investment” in your overall earning potential and comes with a lower interest rate that credit card debt, it still affects your debt-to-income ratio (DTI).

And that might determine if a lender will approve your application for a car loan or mortgage, if the jewelry store will sell you that engagement ring on an installment plan, or if a management company will rent you your dream apartment. A lender wants to see that you’re bringing in enough cash to cover your debt payments—hence, looking at your DTI for a sense of how much you’re earning versus paying out to existing debt.

What Are Some Other Alternatives?

Deferment is better than defaulting on your student debt—by a wide margin. But it’s a short-term solution.

Are you certain you’ll be better prepared to make the same payments in six months or a year—even three years? If you expect your economic prospects to improve in a relatively short period, a temporary delay could be the way to go.

A better option may be to check on your eligibility for one of several federal loan repayment programs, such as income-driven repayment . Income-driven repayment plans allow you to pay 10%, 15%, or 20% of your discretionary income to your loans—depending on which specific plan you chose. While this generally means extending your loan term and therefore paying more interest over the life of the loan, it also can lower your monthly payments and make them more manageable.

You also might be able to improve your interest rate—and, therefore, your long-term cost—by consolidating and refinancing all your federal and private student loans into one loan with one payment.

If you haven’t yet missed a beat as a borrower—if you’ve graduated, have a job and still have a solid credit and financial background—you may be able to qualify for a new student loan at a lower rate. Depending on how you restructure your debt, refinancing could help you pay off your student loans at an even faster pace than you planned.

Can Refinancing Affect Your Credit Report?

Every person’s credit story is different, so it’s hard to say exactly how any change might affect it. On the one hand, refinancing your student loans might help get you out of debt sooner, which could lower your overall debt, thus helping your credit score.

Similarly, if you’re currently struggling to make student loan payments on time (which could hinder your score), and refinancing allows you to make on-time payments each month, that could also help your score.

Ultimately, refinancing could have a different impact on every financial situation and credit history. And there are few better recipes for credit report improvement than diligently making your debt repayments on time.

That being said, here are a few other things that may help if you’re considering refinancing:

•  Not waiting until you’re in default to shop for a refinancing loan. If you’re in default when you apply to refinance, it will likely make it more difficult for you to get a refinanced loan with a competitive interest rate

•  Reviewing your credit report for errors—and speaking up if there is any misinformation on your report

•  When looking into pre-qualify, you may want to be sure the lender will only do a soft credit inquiry to determine if you prequalify (which won’t affect your score)

•  Making payments on your current loans until your new loan is in place. And once you start paying your refinanced loan, it’s just as important that you stay up to date on your payments. Some lenders offer hardship assistance in certain circumstances—if you lose your job, for example.

Every lender has its own criteria for determining which borrowers it will do business with. If you opt to check your rates, SoFi will conduct a soft credit pull* to determine the rates and terms for which you qualify and show those to you upfront. The process is done online and takes just a couple of minutes.

If you decide to refinance with SoFi, in addition to potentially getting a lower interest rate, you can take advantage of other perks, including complimentary career counseling.

But remember: The goal of refinancing is to get back on track and then stay on track. That’s a key way you can help build a solid credit record that will make borrowing easier and less expensive in the future.

*To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.
SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

You may have heard that consolidating your debts can hurt your credit score. So, if you’re considering this financial strategy to free up cash flow and otherwise streamline debts, it’s natural to wonder if that’s true. And like so many questions related to finances, the answer depends upon your specific situation.

It’s important to remember that a combination of many factors can affect credit scores and to understand how those factors are considered in credit score algorithms. We’ll use FICO® as an example—according to them, the high-level breakdown of credit scores is as follows:

•  Payment history (35%): This includes delinquent payments and information found in public records.

•  Amount currently owed (30%): This includes money you owe on your accounts, as well as how much of your available credit on revolving accounts is currently used up.

•  Credit history length (15%): This includes when you opened your accounts and the amount of time since you used each account.

•  Credit types used (10%): What is your mix? For example, how much is revolving credit, like credit cards? How much is installment debt, such as car loans and personal loans?

•  New credit (10%): How much new credit are you pursuing?

Now, here is information to help you make the right debt consolidation decision.

Benefits of Debt Consolidation

When you’re juggling, say, multiple credit cards, it can be easy to accidentally miss a payment. Depending on the severity of the mistake, that can have a negative impact on your credit score. This, in turn, can make it more challenging to get loans when you need them, or prevent you from getting favorable loan terms, like low interest rates. Plus, even if you don’t miss a payment, when you have numerous credit card bills to juggle, you probably worry that one will get missed.

Plus, it’s not uncommon for credit cards to have high interest rates, and when you only make the minimum payments on each of them, you very well may be paying a significant amount of money each month without seeing balances drop very much at all.

So, when you combine multiple credit cards into one loan, preferably one with a lower interest rate, it’s much more convenient, making it less likely that you’ll accidentally miss a payment. And paying less in interest will likely make it easier to pay down your debt.

How you handle your debt consolidation, though, and the way in which you manage your finances after the consolidation each play significant roles in whether this strategy will ultimately help you.

Steps to Take: Before the Debt Consolidation Loan

Debt accumulates for different reasons for different people. For some, unexpected medical bills or emergency home repairs have served as culprits. For others, being underemployed for a period of time may have caused them to start carrying a credit card debt balance. For still others, it may be about learning how to budget more effectively.

No matter why credit card debt has built up, it can help to re-envision a debt consolidation strategy as something bigger and better than just combining your bills. As part of your plan, analyze why your debt accumulated and be honest about which ones were under your control and which were true emergencies.

And if you end up using a lower-cost loan to consolidate your bills, consider using any money saved to build up an emergency savings fund to help prevent the accumulation of credit card balances in the future.

The reality is that, if you consolidate your debts in conjunction with a carefully crafted budgeting and savings plan, then debt consolidation can be a wonderful first step in your brand-new financial strategy.

Debt Consolidation: When It Can Help Your Credit Score

Based on the factors used by FICO, here are ways in which a consolidation loan can help credit scores:

Payment history (35%)

Because making payments on time is the largest factor in FICO credit scores, a debt consolidation loan can help your credit if you make all of your payments on time.

Amount currently owed (30%)

Although you may not instantly reduce the amount you owe by, say, consolidating all of your credit card balances into a personal loan, there can be a benefit to your credit score here. That’s because the credit score algorithm looks at credit limits on your cards, as well as your outstanding balances, and creates a formula that calculates your credit card utilization.

Here is more information about credit card utilization, including how to calculate and manage yours.

Credit types used (10%)

As you may know, there are several different types of credit, such as credit cards, retail accounts, installment loans, finance company accounts, and mortgage loans. According to myFICO , responsibly using a mix of these, such as credit cards and installment loans, may help your credit score.

However, it’s certainly not necessary to have one of each, and it’s not a good idea to open credit accounts you don’t intend to use.

Debt Consolidation: When It Can Hurt Your Credit Score

Now, here are ways that the same initial step—taking out a debt consolidation loan—may hurt your credit.

Payment history (35%)

As is the case with most loans, making late payments on a consolidation loan can hurt your credit score (depending on the severity of the situation). Loans in a delinquent status are mostly likely to have a negative impact on your credit, depending on the lenders’ policies.

Learn more about payment history .

Amount currently owed (30%)

Now, let’s say that you pay off all your credit cards with a personal loan and then you begin using them again to the degree that you can’t pay them off monthly. Any gain that you saw in your credit score will likely disappear as your credit utilization numbers rise again.

Another way that credit consolidation can harm your score is if you combine all of your credit card balances to just one credit card, resulting in a high utilization rate. But if you are able to keep it relatively low, it is less likely to negatively affect your score.

Learn more about amounts owed .

Credit history length (15%)

If you close credit cards that you pay off, you’ll reduce the age of your accounts, overall, and this can hurt your credit score.

Learn more about length of credit history .

Credit types used (10%)

If you combine all of your credit card balances into just one credit card, as described above, you won’t have opened an installment (personal) loan, so that won’t help with diversifying credit types.

Learn more about credit mix .

New credit (10%)

If you apply for a personal loan or a balance-transfer credit card and are rejected, this can cause your credit score to decrease. And if you apply for multiple loans or credit cards, looking for a lender that will accept your application, this can also hurt your score. Multiple requests for your credit report information (known as “inquiries”) in a short period of time can decrease your score, though not by much.

Learn more about new credit .

Concerned about building or rebuilding credit? Check out a few tips SoFi put together on how to strategically boost your credit score.

Investigating a Personal Loan for Debt Consolidation

When it’s time to apply for the personal loan, you’ll want to get a low rate. In February 2019, the average credit card interest rate was reported as 17.67%; this means that, by not consolidating your credit cards into a personal loan with a lower interest rate, you could be paying more interest than if you did.

When choosing a lender, ask about the fees associated with the loan. Some lenders charge fees; others,like SoFi, don’t. You can always use a lender’s annual percentage rates (APRs) as a way to understand the true cost of financing.

Also, you may consider calculating the shortest loan term that your budget can comfortably accommodate because, the more quickly you pay off the debt, the more money you’ll save over the life of the loan because you’re paying less in interest.

You can find more information about saving money as you consolidate your debts, and you can also calculate payments using our personal loan calculator.

Consolidate Your Debt with a SoFi Personal Loan

If you’re ready to say goodbye to high-interest credit cards and to juggling multiple payments each month, a SoFi personal loan may be a good option.

Benefits of our personal loans include:

•  Fast, easy, and convenient online application process

•  Low interest rates

•  No origination fees required

•  No prepayment fees required

•  Fixed rate loan

You deserve peace of mind. And by taking out a personal loan to consolidate debt, the stress of juggling multiple credit card payments can be history. Ready for your fresh start?

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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