How Does a Student Loan Affect Your Credit Score?
Due to the fact that 44.2 million Americans have already taken a student debt, they are now making sure that they are properly educated when it comes to student loans.
Today, we will look deeper on how a student loan can affect a student’s credit score.
By reading this article, you will be educated on how a student loan can contribute on your score and what techniques you should follow in order to maintain the best possible score that you can have.
What a Credit Score Means
Who is responsible for calculating your credit score? How is it calculated?
FICO is the largest and the most popular company that issues credit scores; hence, most probably they are the ones that will issue your score too.
There are actually several factors that are considered before coming up with your credit score results, these includes the following:
How Long a Credit History Is
What Composes Your Credits
Amounts that Needs to be Payed
Your credit score is made up of 10%, 15, 10%, 35% and 30% of these components, respectively.
Your credit score is made through mathematical calculations. These specific calculations are not shown by FICO.
You can use several ways in order to know the status of your credit, as a matter of fact, there are even some companies and bureaus that can provide you the information that you need.
If you really want to check your credit score online, you can check a website called Credit Karma.
We highly recommend that you obtain a summary showing how you performed, this can be done by requesting a credit report once a year from a couple of credit companies such as Experian, TransUnion, and Equifax.
A Credit Score Must be Maintained from Good to Exceptional
In order to maintain a great credit score, you have to find out what would make it good, very good and exceptional.
Within the standards of FICO, they are defined as follows:
A score between 670 and 739 is a GOOD score
A score between 740 and 799 is a VERY GOOD score
A score between 800 and 850 is an EXCEPTIONAL score
Now that you already know where the great scores are, you should start finding out how it can be maintained. The truth is, you can easily do this by simply making your payments.
This would mean that you have to pay any type of credit that you have in full amount once they are due.
If you have a favorable score, it can definitely help you in obtaining more school loans, a home loan, rent an apartment, and even buy a car. People who stand between you and your goals will certainly examine your credit score closely, just like the other cases.