Student loans are the norm for many people attending college or graduate school. The process is rather simple, and most are granted a loan. However, many people do not realize that student loans can severely affect your credit score. One missed or late payment can cause your credit score to tumble, thus leaving you susceptible to higher interest rates and a lower chance of borrowing money for a home or other endeavor.
It is vital that you do not miss student loan payments. Missing payments, as already mentioned, will hurt your credit score. If you tend to forget things, set up reminders in several places, such as your email account, calendar, or cell phone reminder. Leaving notes in commonly used places in your house, such as your computer, can also help you remember. Take steps to remind yourself of the dates for those payments.
Regardless of your circumstances, do not default on your loans. Doing so will destroy your credit and it will be difficult to rebuild your credit score within a reasonable amount of time. What many do not realize is that a student loan default will remain on your credit report for 7 years. Therefore, for the next 7 years any time you try to make a major purchase such as a home or vehicle your interest rates will be higher. Credit checks are also running on renters, so even trying to rent a new apartment can be a hassle with bad credit.
Student lenders have immense power over borrowers, as well. Defaulting can make the loan even harder to pay off because many lenders will choose to garnish the wages of the defaulter. Lenders can even garnish disability checks and Social Security. That means you should do everything in your power to avoid that situation, including considering deferments, forbearance, or even a different repayment schedule. Many people do not know that you can request a change in your payment schedule, and it is worth trying to get if you are behind on your payments.
If you are having difficulty paying your loans, contact your lender and ask them to negotiate with you, as at times they will. If that does not work, reach out to family or friends, and let them know you are having difficulties with your student loan payments. If you are in default or are teetering on the edge, it is also wise to consider getting a part-time job to help supplement your income.
While student loans are a blessing to many looking for ways to find their college degree, they are also a hindrance if they are not repaid on time. Every loan recipient needs to pay their loan payments on time. If it is not possible, there are many avenues to choose from to save you from default. Regardless of the path you take, the result is to avoid a loan default.