8 Lessons Learned: Resources

The Impact of Student Loans on Your Credit Score

Americans are very much concern on having a proper education when it comes to student loans since 44.2 million of them already have a student debt.

At this point, we will focus on student loans and how it can affect a student’s credit score.

Through this article, you will come to understand the contributions of student loans in your score, as well as the strategies that can help you maintain the best possible score.

Understanding Credit Score

Who is responsible for calculating your credit score? How is it calculated?

Your credit score is probably calculated by FICO since they are the most popular software company within their sector.

There are many factors that are taken into consideration with regard to how it is calculated such as:

Latest Credits

Duration of Credit History

Your Credit Mix

Payment Records

Due Amounts

These components comprise 10%, 15%, 10%, 35% and 30% of your total credit score, respectively.

A credit score is made by using mathematical calculations. These specific calculations are not shown by FICO.
Since there are several bureaus and companies that can provide you an information on how your credit is doing, you do not have to worry much about it.

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

Knowing what makes a good, very good, and exceptional credit score will help you maintain an exceptional score.

Within the standards of FICO, they are defined as follows:

A score between 670 and 739 is a GOOD score
If a score is between 740 and 799, it is already considered as a VERY GOOD score
A score between 800 and 850 is an EXCEPTIONAL score

Since we already have an idea on where the favorable scores are classified, the next thing that you should find out is how to maintain them. The truth is, you can easily do this by simply making your payments.

Which only means that you should be paying all the credits that you have in full 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.