Posts Tagged ‘improve credit using student loan’

Improve Your Credit Score Using Student Loans

There are several ways to. But, very few people know that student loans can also play a crucial role in this regard. If you follow certain strategies, it can help you achieve a better FICO score. It is very important for you to keep in mind that any outstanding debt that you to a creditor contributes in creating your credit history. This outstanding debt can be a student loan. The basic thing is that when you are regular in making the monthly payments toward this loan, it will result in a better monthly payment history, which will eventually lead to improved credit. On the other hand, when you start making defaults, it will actually damage the health of your credit report.

Using Student Loans to Build Positive Credit

If you are using student loans to improve your credit score, there are certain do’s and don’ts that you must follow strictly. For example, you should take as much loan as you can easily afford to repay. You must make the repayment in a timely manner. Avoid late payments. Late payment does not only attract penalty charges, but it also affects your credit report adversely. Needless to say that defaulting on these loans will seriously hurt your credit. It is very important for you to keep in mind that your monthly payment history makes up to 35% of your FICO score. If you build a good payment history, you will end up building a good credit score. Likewise, if you build a bad payment history, your score will go down and down.

FICO Score and Life after College

College students often do not realize how crucial a role credit score plays in a person’s financial and professional life. Your is going to influence your life immensely after college. That is the reason students are recommended to take care of their financial life right since they join college. Even if you are studying in a college, you can do several things to improve your credit score. Student loan can be a great tool in this regard. Better credit history will make it very easy for you to buy homes and cars on low rate loans. In fact, a majority of employers these days first check the credit report of the job applicants before appointing them. So, if you have a good FICO report, your chances of getting a better job is also very bright.

Overall, a student loan has an array of advantages. It finances your education. And, at the same time, it also provides you a great opportunity to improve your credit score significantly.

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