Small Private Credit Loans Weakening Fastest, Moody's Says
Loans taken out by smaller companies weakened at a faster rate between 2023 and 2024 than those by bigger companies, yet overall credit quality remains stronger than before the pandemic, according to Moody's Ratings.
The share of small middle-market companies with weak liquidity climbed about ten percentage points to over 30% during the period, Moody's said in a report on Monday. By contrast, for those with more than $50 million in earnings before interest, tax, depreciation and amortization, the share with weak liquidity rose only slightly to less than 20%, the ratings firm said.
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See related: How to consolidate student loans You may be able to lower your rate, spread out your loan term to lower your payment or simplify your monthly bill payments to just one student loan. It's important to remember that you'll lose access to federal student loan benefits if you use a private refinance loan. You won't typically save money on a federal student loan consolidation, since the rate is the weighted average of your existing loans. Your best bet for a lower student rate is to boost your credit score as high as possible, so you're eligible for the lowest private student loan refinance rates. The Direct Consolidation Loan program allows you to spread your payment out as long as 30 years, which could give you a substantially lower payment on your federal student loan balances. You may also be able to combine your federal balances with a private student loan refinance, with some lenders offering terms over 20 years in special cases. Just remember: The longer you take to pay the balance off, the more total interest you will pay. If you took out multiple student loans to complete an extensive education, you may have quite a pile of outstanding accounts to keep track of. By reducing your number of outstanding accounts, you might see your credit score improve a few points, since the number of outstanding accounts makes up 10 percent of your credit score. Bankrate insight Consolidating your student debt can also save your credit report in the long run if you miss your monthly payment and it shifts to delinquent status. When you consolidate, you only have one loan and therefore only one account will have a delinquent payment report. One late payment still isn't good for your credit score, but it's less damaging to your credit health than late payments on several student loan accounts. According to findings from the most recent West Health-Gallup Survey, 12 percent of Americans had to borrow money in the past 12 months to pay for healthcare for themselves or someone in their household. If you're sitting on dozens of unpaid bills and getting past-due notices, consolidating the debt may be a solution. Simplifying your payment schedule can remove a stress burden while you or a family member recover from a medical event. You'll have an easier time keeping track of bills, and may even realize some credit benefits if you end up avoiding collections for unpaid bills. Personal loans can be a good method of consolidating medical debt if the payment options offered by providers are too expensive. A 0 percent interest credit card may also get the job done at a low cost, if you can pay the balance off within the no-rate promotional period. On the downside, consolidating medical debt means you'll most likely pay interest on it — at least if you pursue the personal loan route. Still, if these bills have been sitting there for a while, it may be worth a try. If your medical debt totals $500 or more and has been unpaid for a year or more since your doctor's appointment, the balance could be sent to collections, hurting your credit score. You can avoid getting negative marks on your report by consolidating the debts before they become excessively late. If you recently took out several high-interest-rate bad credit personal loans to consolidate credit card debt and improve your scores, it may be time to look at combining them into one new personal loan. Personal loan rates range from 6.5 percent to 36 percent, and even an improvement from bad to fair credit could reduce your personal loan rate by 5 to 10 percentage points. Having more than one personal loan can put a strain on your budget, and the fewer payments you have to keep an eye on, the less chance you'll miss a payment. Plus, if you've been diligently taking steps to improve your credit score, it may have improved enough that you qualify for a much lower rate. The most common reason to pay off several personal loans with a new one is to get a better interest rate. That said, the lowest rates typically go to borrowers with excellent credit for terms of three years. Make sure you can handle the higher payment that comes with a shorter term to avoid taking on a debt you can't afford. If you had to take out a short-term loan to qualify because of bad credit, but your credit scores have since improved, you may qualify for a longer term on a new personal loan. You'll pay more in total interest, but you can apply the extra monthly savings to the loan balance or boost your emergency savings account if it's running low. There are not many types of debt that can't be consolidated. Although we've covered credit cards, student loans, medical debt and personal loans here, you can also consolidate secured boat loans, auto loans and even mortgages on multiple homes. However, the ultimate goal should always be to save more and borrow less. Debt consolidation — if used wisely — can be a helpful tool to get your debt under control and paid off as quickly and cheaply as possible. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
