Will your credit score drop if you take out a loan for college?
Wednesday, August 19th, 2009 at
9:42 pm
Adam the Poet asked:
I am worried that my credit score will drop when i go to college because i have to take out a loan for college. How do i go to college on a loan but still manage my credit score.
I am worried that my credit score will drop when i go to college because i have to take out a loan for college. How do i go to college on a loan but still manage my credit score.
Tagged with: College Loan • Credit Score • Loan For College
Filed under: Student Loans
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Don’t worry about this. Yes, your credit score may go down a point for applying for a loan, but that’s no biggie as long as you make your payments on time. Certainly a college education is worth one point drop in a credit score. Plus, if you are just entereing college, you may not even have a credit score yet.
Initially it will drop (as it does when any new credit account is added) but it will go back up as long as the loan is maintained (i.e. paid on time).
If you don’t want to have your score affected you need to either pay with cash, or find a lender who doesn’t report to the credit bureaus.
Great question …anytime you apply for a loan – your score can be affected , usally 1 -3 points.
No a big issue you get that back with the first on time payment .
Where you can be hurt is your debt to income ratio .
Your score can be affected from your debt toincome ratio
( how money you have borrowed and how much you make)
IE : you make $ 1000 a month you rbills total $400 monthly – your debt to income ratio = 40% – this is high 20% is low
So be very careful with too many loans not all are federaly funded loans .
Too much debt on your credit report can reduce your score as much as 100 points .
FYI – the biggest things that impact your score debt /income and payment history