By Amy Jhn
Because of the rising cost of tuition, more and more students are forced to apply for student loans to pay for tuition fees and other school necessities. Getting loans while they’re still getting their degrees teaches students the value of credit and the value of hard work.
Other students stay away from loans because they usually say, “Taking on a student loan will be negative for my credit report.” Or “Taking on a student loan will affect my credit score.”
Loans can be a nightmare for many students especially if they don’t do proper research before applying. Loans having a negative effect on your credit are one of those credit myths that affect the students’ views on loan applications.
How to Keep a Student Loan Credit Score Friendly
It could have a good or bad effect in your credit score. There are ways to keep a student loan favourable to you. Just follow these tips:
1. Pay on time every month
Low credit scores are never a good thing especially for students. It should be paid on time every month because this will show on your credit report as proof of a good payment history. If you’re a student that has a credit card and a student loan, they could actually be a plus to your credit score. Multiple bills to your name that are paid on time tell lenders and creditors that you can handle your finances well.
Make sure that you pay your loans and other bills on time so that it would be easy for you to buy a home or a car after you graduate.
2. Take control of your credit card debt
If you have a credit card, it should be well-regulated and paid on time. It has a greater effect on your credit score than an actual loan, but this doesn’t mean that you should prioritize it over your student loan. Both can have a tremendous impact on your credit score so you have to handle them both very well. Student debt doesn’t go away even if you file for bankruptcy someday. It will haunt your credit score and finances in the long run if you don’t know how to manage it.
3. Talk to your lenders
There can be times when you go through personal difficulties that affect your ability to pay your bills on time. Talk to your lenders if you feel you are unable to keep up so that you can discuss how you can eventually get back on track with your loan. They might be able to give you a 30-day or 60-day reprieve on your loan, so you don’t have to worry about your payments in the short term.
4. Regularly check credit reports
College students should always do this so that they may be aware of their payments and their loans. Take note that there are some lenders that do not give reports to all three credit bureaus and loan reports are not the same all the time. Keep an eye on unauthorized purchases or loan approvals as well and make sure you refute them.
Before you apply for a student loan, make sure that you can handle it well. It doesn’t have to be a negative on your credit as long as you know what to do to turn it to your advantage-as a student and as a future college graduate.
Amy is an active blogger who is fond of sharing interesting finance related articles to encourage people to manage and protect their finances. She also covers topics on how to check your credit score and what is considered a bad credit score.
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