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?

 
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Building Credit

Building good credit is essential to your long-term financial success. A good credit score can help you access financing for larger purchases, like a home.

Your Credit Report
Your personal credit report is a record of your financial behavior, including repayment of your student loans. Your credit report contains specific information about each account, including the date you opened it, your balance, credit limit, monthly payments, and even your payment patterns over time. Lenders can immediately see if you are responsible with your finances. The information in your report contributes to your overall credit rating, which can directly affect your ability to get financing in the future.

The Danger of Default
If you are late making monthly payments on a loan, that loan may go into default. The consequences of defaulting on your loan are severe:

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

A loan in default will negatively affect your credit rating, and a default can remain on your credit report for up to seven years.

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

Student Loans Deductions
In most cases, it may be possible to deduct up to $2,500 of the interest on your student loans from your taxes. You marital status may affect the amount of the deduction for which you are eligible. For example, you can't get the deduction if you're married and filing separately, or if you can be claimed as an exemption on anyone else's tax return. See if you qualify for school deductions by reading the information on tax forms 1040A or 1040. For other educational credit information, look for the Tax Benefits for Education section on the IRS Web site.

Maintaining Your Credit
It's important to stay on top of 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 from the three major consumer credit agencies: Equifax, TransUnion, and Experian. Build good credit now, and you'll have more financial power in the future.