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.
At this point, we will focus on student loans and how it can affect a student’s credit score.
This article will teach you on how much student loans make a difference in your score and the strategies that you should do to maintain that score as much as possible.
Understanding Credit Score
If you are curious on who calculates your credit scores and how it is calculated, just read this article further.
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 many factors that are taken into consideration with regard to how it is calculated such as:
Credit History Length
What Composes Your Credits
These components comprise 10%, 15%, 10%, 35% and 30% of your total credit score, respectively.
Mathematical computations are utilized in order to come up with a credit score. FICO will not actually show the exact calculations that they have computed.
If you want to know your credit status, you can several ways for it, in fact, there are some bureaus and companies that can provide you with the information that you need.
Websites like Credit Karma can provide you an information regarding your credit score.
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.
An Excellent Credit Score Should be Maintained
If you want to keep an excellent score, you need to fully understand what will make a good, very good and exceptional credit score.
Based on FICO standards, they are classified as follows:
If a score is between 670 and 739, it is already considered a GOOD score
If a score is between 740 and 799, it is already considered as a VERY GOOD score
A score is considered EXCEPTIONAL if it is between 800 and 850
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.
You can be easily helped in renting an apartment, obtaining a home loan, buying a car and even get more school loans if your credit score is favorable. People who stand between you and your goals will certainly examine your credit score closely, just like the other cases.