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How do student loans impact your credit rating?

Oct 3, 2017 by

Were those student loans worth it?

Looking back at your choice to use student loans to help finance your education may leave you wondering if that was the best choice for your life. The amount of money that you owe may seem intimidating, but that does not mean that it was a mistake to make that choice for your future. While a student loan in a long term investment, there can be many financial benefits to having a student loan for your financial situation. Of course the biggest concern is making sure that you are making your payments on time. If you do not, then your student loans will have a large negative impact on your credit report, but with a history of on time payments, you can see some great benefits to your overall score. Here are some important tips to help you keep on track with your payments and your credit score.

  1. Get help if you need it.

If you are having issues with paying back the full amount that you need to on your loan, then you should look into some of the great alternative payment options that are out there. One example is an income based payment plan. With an IBP, you will have your payments adjusted based on how much you make each year. Depending on your income, you not have any payments due. You can also look into a deferment which gives you a temporary period of time where you do not have to make payments on the principle of the loan. One down side to both of these options is that you will still accrue interest on the principle during these periods of time.

  1. Make your payments on time.

35 percent of your credit score is determined by being able to make your payments on time. This can have a huge impact on your overall score, so you will want to make every effort that you can to keep you payments up to date.

  1. Can you get your loan reduced or forgiven?

There are some programs out there that offer to forgive your student debt depending on a certain set of criterion. This can include volunteer or military service. If you are looking into a program like this, and your loans are discharged, there will be no negative impact on your score since it will simply be listed as discharged, but be ready to make an explanation if anyone you are looking to borrow from takes a closer look at your record. (Don’t worry, they won’t mind that as a reason.)

  1. Get professional help from a credit repair company

If you credit score is not where it needs to be then you can also consider hiring a professional credit repair service who will work alongside you to repair and improve your credit rating.

The wrap up.

As student loans continue to increase, so does the concerns about how to handle that debt after you finish school. Remember to keep on track with your payments and to ask for help if you need it. After all the loan companies have a strong interest in helping you to pay off what you owe so that they can get that money in the end.

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