It can not be stressed enough how important having good credit is, it is the ultimate determining factor on how much interest you are going to have to pay when taking out a loan. Having a high credit score means less in interest therefore you save and for a low credit score vise versa. If you can increase your credit score by 100 points, you can pay less interest, pay more principle and get out of debt more quickly. In this country having a good credit score can make or break you.
Student Loans: A Good or Bad Thing?
Everyone knows that student loans can be very helpful while in school and your financial needs are high. Taking out those students loans have a huge impact on your credit scores. That small payment plans that they set up can seem like a helpful way to pay off the loans without having to sacrifice too much when you start paying back the money. If fact those small monthly payments could be hurting your financial wellbeing through increased interest payments on all your other bills.
When you have any type of loan, it shows the maximum credit, the outstanding balance and your payment history. The credit score takes into consideration the total amount of outstanding balances. The more you owe, the lower the score. Student loans almost always report to your credit report with inflated amounts. So, for your credit score, when you owe only $10,000 in student loans, it computes your score as if you owed $30,000! This can have a huge impact on the amount of interest you pay on the next loan you try to take out.
These student loans, in most cases are very needed towards schooling, are hard to turn down when they are willing to give a loan out to students that might not have much credit to start with. The thing that students taking out loans should remember is to always know what is going on with there credit scores and to always make the payments on time and if they can try to throw more money that way the loan will be paid off faster.
Looking Down the Road
For the future we all want to have the highest credit scores we can because it is only going help us save money and it will be less of a hassle getting money when we need it. Student loans are a form of a loan designed to help out students while they are in school. Most student loans do not have to be paid back until one graduates from the school they are attending, so it is important to know what is happening with the money.
If one is able to stay on top of they finances and pay off these loans then that will have a huge impact on your score. You may see a huge rise in your credit score just because of the fact you were able to stick with the loan and pay off what you borrowed plus the interest.
Student Loan Tips
There is much advice that can be given on the subject of student loans, some good some bad. It is important to your financial health to know what is going on with your credit score and what needs to be done to ensure that your credit score does not get ruined.
Here are a few great pointers to keep in mind:
- Pay your student loan bills!
- If you can pay the interest on the loan while in school, then pay more towards the principle once done with school.
- Consolidate your student loans to improve you score.
- Always understand what you owe and your credit score.
Although some of these tips might seem like common sense they are very important and can have a major impact on your credit score if you neglect paying attention to them.
Additional Resources:
Phillip Sunders
Team Your Credit Network