Building Credit

As a college student, you may not have an extensive credit history so it's important to become credit-savvy. Having a good credit score can be a major asset when you want to purchase a home. One way you can positively build your credit is in repaying your student loans on time.

Your Credit Report
Your credit report contains information about every account under your name, including the date you opened it, your balance, credit limit, monthly payments, and a sketch of your payment patterns. With it, lenders determine your credit worthiness, which determines your overall credit rating. An 800 credit score is like a 4.0 GPA. Your credit report goes back seven, which makes it incredibly important to start good credit habits early on.

Your earliest experience with credit might very well be your student loan. The average amount of undergraduate borrowing is $24,600 and that's a lot of credit. Depending on whether your money management skills are good or poor, you can protect your credit or ruin it for a number of years, which will affect your future borrowing.

Default Danger
Don't allow your student loans go into default, which happens if you consistently make late monthly payments. The repercussions of defaulting on a student loan can be disastrous, especially for someone trying to build positive credit. Remember, even if you begin making payments again, your slip-up can remain on your credit report for up to seven years.

If you're unable to make payments on a loan, contact your lender immediately. You may be able to temporarily defer your payments or apply for forbearance.

Maintaining Your Credit
Conscientiously making your student loans payments can greatly benefit your credit score and keeping a good credit rating can give you a lifetime of financial success.