How does a student loan affect your credit?
FuzzyLizard asked:
I have a student loan that is about 50K. I am making payments on it but I am on the income contingent plan and every month I get a statement showing that what Im paying is not enough to pay even the interest, so the balance is higher every month. Does this negatively affect my credit, I pay every month on time but I want to know if this will affect my credit. Does the 50K count towards debt to available credit ratio also. How does the student loan affect credit ratings?
If you set the loan period less than 10 years, your monthly payment may reduce but your loan terms may not be more than 10 years. But you should ensure that you pay your monthly installments regularly. Failure to do so will raise the interest you have to pay your lender. This is because the charge paid on these loans is an average of all the consolidated loans, rounded off to the closest 8th of a percent, maximized at 8.25%. But consolidating before repayments gives you lower interest rates.
Comment by jemmy t — February 21, 2009 @ 9:18 am