The Benefits of Student Loans
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.
We will now discuss how a student loan will really affect your 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.
What a Credit Score Means
Who is responsible for calculating your credit score? How is it calculated?
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:
Credits that are New
Credit History Length
What are Included in Your Credits
Amounts that Needs to be Payed
These components comprise 10%, 15%, 10%, 35% and 30% of your total credit score, respectively.
A credit score is made by using mathematical calculations. 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.
Make Sure that a Good to Exceptional Credit Score is 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.
Through the standards provided by FICO, they are defined as the following:
If a score is between 670 and 739, it is already considered a GOOD score
A score is considered VERY GOOD if it is between 740 and 799
If a score is between 800 and 850, it is already considered 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. This can be done by simply paying your credits.
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. Just like most cases, those people who have a role between you and your goals will certainly take a good look at your credit score.