Whenever you apply for a loan, the very first thing that a lending company checks is your credit score.Many people are worried about getting their score hurt if they take out a student loan.The truth is, just like any debt, the effect of your educational loan depends on how responsible you are in settling the due amount.If your payments are prompt, then there is nothing that you need to worry about.In fact, it will even uplift your credit score.However, if you have late payments, then obviously your credit standing will get hurt.
If you took out several educational loans, you have the options like refinancing and student loan consolidation.Refinancing is when you get a loan from a new lending company to settle your existing loan from the first money lender.While consolidation is when you combine your debts so you can manage them as one.Consolidating your obligations may also entail refinancing.
Here are some of the things that you can do to protect your credit score:
FORBEARANCE OR DEFERMENT
If you are having a hard time repaying your student loan, you may request for a forbearance and deferment.This means that amount of your payment will be lowered down temporarily OR the due date will be moved to a different date.Aside from protecting your credit score, this two will also help you avoid getting your loan tagged as default.For you to be approved for either forbearance or deferment, you have to show your bank or the lending company that can get back on your feet shortly.Keeping communication between you and your loan provider will also be a way to increase your chances to be approved.Let them know the real situation that you are on and how you will be able to cope up.
Student loans are classified as installment and installment loans have a lesser effect on your credit score compared to that of the so-called revolving credit.
COPE UP AND UPDATE YOUR STUDENT LOAN REPAYMENT
In case that you have missed payments, you will still be able to uplift your credit score as long as you settle the past-due payments.
This is the best thing above all that you can do to protect your credit score.Be a responsible borrower and pay on time to avoid problems.