What Does Private Student Loans Have to do With a Credit Score
Many people find that after many years of struggling to pay off private student loans one at a time that they are in financial danger of losing their high credit score. They are sinking amongst loan payments, high rent, expensive car payments and a growing cost of food. This is usually what drives most who have taken out these private student loans to seek out a more practical way to pay them off in order to save their credit score. Desperation has led them to the loan consolidation programs which presents a much simpler way to pay off all of these private student loans by compressing them into one single loan and giving the person a lifeline to keeping their credit score in decent shape. It’s enough to save a person’s sanity as well.
How to Consolidate Private Student Loans to Keep Your Credit Score
As soon as you start to check into loan consolidation with different banks, comparing payment rates and fees, the lenders will then show you how combining these loan payments into one payment can give you a more affordable interest rate. This will provide a much lighter payment burden of your private student loansand loan consolidation does not hurt your credit score either.
Why You Should be Concerned About How Your Private Student Loans Affects Your Credit Score
First, you have to know just exactly what a credit score is. It is an objective measure of just how much a payment risk a person is. A credit score reflects on how dependable you are as far as making monthly payments on time and how quickly you pay off your credit and loan debts. Some jobs will not even hire you unless you have a high credit score. That’s how important keeping your credit score in good shape is. And private student loans are sometimes a wonderful way of either repairing bad credit scores or building one up for beginners. One of the most popular credit scores is the FICO, which ranges from 300-850 range. You don’t want your credit score to go below 650.
Are Private Student Loans Better for a Credit Score
Although Federal student loans offer a lot more options than the private student loans, they cannot be consolidated. If you have maxed out the amount for Federal student loans, then the private student loans are the only option available and even then you have to keep a close eye on your credit score when it’s time to start those repayments. In fact, if you have a co-signer with a good credit score, it’s actually a lot easier to get a private student loan. And, remember, if you consolidate these private student loans and make the payments on time, you can actually raise your credit score. Another thing to keep in mind is that most of the private lenders do not apply prepayment penalty fees. So you can pay these loans off early and not worry about being penalized for it.