Five Things You Might Not Know About Federal Student Loans and Your Credit Score
In an earlier blog, we told you all about the highlights of Federal Student Loans and how they can be used as a realistic option for furthering your education. In this week’s blog, we’ll be sharing some lesser-known facts about how having a Federal Student Loan can help out with your credit building.
- Even if you have a bad credit rating, payments on Federal Student Loan can help you. As long as you make those payments regularly and on schedule, the good credit you earn from your regular payments can help erase any preexisting poor credit you might have on file.
- Deferment or forbearance of your loan will not hurt your credit score. During this time, your payments are not considered missed or late because they’re simply not due. If you need some sort of repayment assistance, you can rest assured that these won’t lower your credit score.
- Participating in the income-based repayment (IBR) program of Federal Student Loans doesn’t negatively impact your credit score. Sometimes payment amounts are unaffordable based on the salary you are bringing in, so the government has put together the IBR program to help even the playing field, making sure that your payments match what is feasible for your salary. Enrolling in this program has no negative affect on your credit score.
- An important note to end on is that missing payments will negatively affect your credit score. Use your planner, smart phone, or whatever system works for you to make sure you never miss a payment due to simple forgetfulness. If you’re truly struggling to afford payments, there are several systems in place—deferments, forbearance, and different repayment schedules—to help you avoid defaulting at all costs.
If you face any financial hardship or temporary unemployment, the Financial Aid department of LA ORT can help you to maintain your positive credit history. Just give them a call!
To read more about student loans and finances, check out these articles: