Invest wisely in your education, and those loans should pay off in the form of higher income over time.
But if you mismanage student loan debt, your credit score could suffer—and that could have a big impact on your financial future. Do I need a good credit score to take out a student loan?
We’ve got you covered with our Student Loan Smarts blog series.
Our expert tips and hacks will help you save money, pay off loans sooner, and stress less about student loan debt.
Some people reason that because education debt is “good debt,” FICO must view it more favorably than other types of debt.
Incidentally, while installment debt is different from revolving debt (like credit card debt), it’s generally better to have positive track records with both of types of loans.But So Fi does things a bit differently—our non-traditional underwriting process looks beyond your credit score to take into account factors such as education and career. Most private student loan lenders use FICO credit scores to determine whether to extend credit and at what interest rate. Unfortunately, FICO calculates your credit score is kind of a black box.This allows us to provide competitive interest rates on student loan refinancing. Since FICO is used widely throughout the lending industry, including by mortgage, auto loan, and credit card providers, it gives lenders an apples-to-apples comparison of potential borrowers. While the various factors and weightings used in the calculation are publicly available on FICO’s website, its algorithm is proprietary, which means that no one can predict exactly how a specific financial event will affect your score.When you know you can’t make a payment on time, talk to your lender or loan servicer right away.Most federal loan lenders and some private lenders offer loan deferment and/or forbearance, allowing you to temporarily suspend payments, which will minimize the impact on your credit score.Making payments on time is obviously important, but what you might not realize is exactly how damaging it is to not pay on time.