If you're not a homeowner or you have very poor credit, consider debt relief instead of a mortgage.

1) Type of debt:

Credit Card Debt
Student Loan Debt
Tax Debt
Other Debt

2) What State do you live in?

 
Your Profile:     Campus • Graduate/Doctoral Degree • Traditional • Full Time     (change your profile)

Building Credit

The key to long-term financial success lies in building good credit and spending habits now. A good credit score can help you access financing for larger purchases, like a home, but poor credit can keep you from financial freedom.

Your Credit Report 
Your personal credit report is a record of your financial behavior, including repayment of your student loans. From your first bank account on, your credit report contains specific information about your financial life, including the date you opened bank accounts, your balances and charges, credit limits, monthly debt payments, and your payment patterns over time. Lenders look to your credit report to immediately see if you are responsible with your finances, and the information in your report contributes to your overall credit rating, which can directly affect your ability to get financing.

The Danger of Default 
If you fail to make timely monthly payments on your loan, that loan may go into default. The consequences of defaulting on your loan are severe:

  • The entire balance can become due immediately.
  • Your account can be sent to a collection agency, and you may accrue late fees, collection costs, court costs, and attorney fees.
  • Your tax refund can be applied to what you owe.
  • You can lose deferment options and the ability to secure financial aid in the future.
  • The Federal government can garnish your wages.

A loan in default will negatively affect your credit rating, and a default will show on your credit report.

Default and Your Credit 
If you're in danger of defaulting on a loan, you should contact your lender immediately to discuss deferment, forbearance, and repayment options. If you've already defaulted, work together with your lender set up a schedule for reasonable monthly payments. With responsible payments over time, it's possible to mend your credit. After you've made nine to twelve loan payments on time, the default status can be removed from your loan.

Tax Benefits of Debt 
See if you qualify for educational tax deductions by reading the information on tax forms 1040A or 1040. In most cases, it may be possible to deduct up to $2,500 of the interest on your student loans. For other educational tax benefit information, look for the Tax Benefits for Education section on the IRS Web site.

Maintaining Your Credit 
 If you're having financial difficulties, talk to your lender about student loan forbearance or deferment options. Even if you feel confident in your credit, you should request free credit reports once a year from the three major consumer credit agencies: Equifax, Experian, and TransUnion.

It's important to stay on top of your credit. Build good credit now and you'll have more financial power in the future.