Student loans often lead to significant debt. Many college students complete an undergraduate degree with more than $30,000 owed to student loan providers. In addition to being a monetary burden, student loan debt can also negatively impact credit scores.
The Benefits of Student Loans
If you are able to maintain timely payments on your student loans, then student loans can help you achieve and maintain a good credit score. This, in turn, will enable to you obtain loans in the future and have low interest rates. The better your score, the lower risk you are which means lenders charge you a lower rate.
What Happens If I Can’t Make My Payments?
If you borrow too much and are unable to make your payments, your credit score will be negatively affected and you will be considered a bad credit risk.
Bad credit will stay on your credit report for 7 years. If you choose to use bankruptcy to get out of debt, it will stay on your credit report for 10 years. However, be aware that you generally cannot discharge your student loans through bankruptcy.
What Can I Do to Keep Strong Credit?
The most important thing to do is pay back your loan in a timely fashion. Try to make your payments greater than the minimum.
If money is tight, don’t ignore your lenders. Stay in direct contact with them. Keep low balances on your credit cards and don’t open too many credit card amounts.
Do I Need an Attorney?
A credit attorney can help you understand your rights and obligations with your loans and your debts. You may need an attorney’s assistance if you are considering filing for bankruptcy. Also, there are instances where you may be able to take legal action against your lender for violations of the Truth in Lending Act.