The most important and significant factor in college loans is not to make it go into default


The most important and significant factor in college loans is not to make it go into default

You can increase your score by making the interest payment on the student loans when you are in school. They also have a grace period of 6 months after graduation. If you start your payments earlier you will get a positive score.

4 – Watch out for default

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This can ruin your credit score and will make you stay on it for several years. It will be better to ask for a free credit report every year to make the payment are being correctly paid to the education loans.

Can I improve my credit score?

If you are in no need for private loans instantly then you can delay applying for a loan by a few months and work on improving your credit score. You should request a copy of your credit report, revise them and check for any errors.

Reducing the total debt level and giving it for consecutive months on-time payments will also boost your score. If you have no credit at all then you can rebuild it for good by applying on your own.

Paying off the loan in advance

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Paying off a loan before time may undermine your credit score. Educational loans need to repaid on installments and making of payments on time will help you demonstrate you as a reliable borrower. If you are paying off the loan in advance and you have no longer the installment debt, you will be losing evidence of being an on-time payer and it could lower the score.

Not making the payment on time will definitely damage your score. If you are having trouble making payments then asking for deferment or forbearance can help you improve the score. Student loans are dischargeable, even if you file for bankruptcy it will most likely get excused and so not repaying the amount will really affect your score.

There are certain pros and cons for refinancing a student loan and based on the individual standpoint we can decide whether the benefits outweigh the drawbacks offered by refinancing.

Refinancing is nothing but taking a loan from a private lender with a lower interest rate to repay an existing loan. This could prove beneficial if the refinanced loan has a lower interest rate. But it should be noted that there are some drawbacks associated with refinancing a loan some of them are:

If you refinance a federal student loan then you lose the repayment options provided by the federal government as most of the loans are provided by private lenders.

Interest rates have been at historic lows so if the objective is to try and get a lower interest rate it may not be fruitful. Even if you do manage to get a lower interest rate the amount you save when divided by the loan duration does not seem to be that profitable.


Thus with the various types of loans discussed we shouldn’t think twice before judging how badly a student loan can affect our credit score. Bad credit shouldn’t stop you from going for a student loan there are ways to get around the bad credit and most importantly there are sources where you can redeem a student loan without much attention to the credit score in hand. If you have time always work on improving your credit score.

The Direct Unsubsidized loans are available to everyone and can be taken out easily, whereas the Direct Subsidized loans can be taken only by students who are in a financial need. These loans tend to have advantages over the unsubsidized one since the government covers the interest which accrues when you’re still in school.

Refinancing option is more feasible: Once schooling is done and a good credit profile must be built, you must apply for refinancing as you ll pay lesser interest rates. You will need regular income, a credit score above 690 or above, and a history of on-time debt payments.