Paying Off Student Loans While Maintaining Good Credit

It is possible to pay off your student loans and keep a good credit rating. Student loans have a lower interest rate than an unsecured loan for other purposes. Keep your student loans at a low interest rate and avoid any new high interest debt. Start an investment plan to protect your future.

Should you pay off student loans early?

To be debt free sounds really good. For some, right after graduation, it seems impossible. But it can be done. Remember, there are two types of debt that look good on a credit report; a mortgage and student loans. To keep a better credit rating, it might be best to just make the payments for the life of the loan. If you had planned on paying the loan off early, or paying extra every month, invest the extra.

Get rid of high interest debt

Consolidate your student loans. Get them into a low interest, low payment, 20 year Government sponsored, loan consolation program. If you have some high interest credit cards balances, concentrate on getting those paid down. The sooner you get high interest debt off of your credit report, the better for your score. Keeping your credit score good will only help you in the future. A good credit score will give you some financial wiggle room.

A loan repayment strategy

Invest as much of your savings as much as possible. Learn where to put your investments. Learn about your debt. Eliminate what you can. Start saving. What you have heard is true: it is never too early to save for retirement.

  • Educate yourself about your loans. You will have 6 to 9 months to start paying them. This is the best time to check into consolidate them. Shop around for the best interest rate. Get your payment as low as possible.
  • Put some of your savings in a high interest savings account. Let this account just sit and collect interest. Add to it regularly. Use this as your “rainy day” fund.
  • Pay off any credit card debt you may have. Try not to carry a balance on any high interest credit cards. If you charge anything on it, pay it off. This will also help your credit score good.
  • Contribute to a retirement fund. Do this on your own, or with your employer. Most employer sponsored fund will include a match from the company. What they match is bonus free money for you. Keep your contribution small enough and you won't even notice it missing. Increase your contribution when you can.

Check into a loan forgiveness program

Check out what your state offers for student loan forgiveness programs. These programs can eliminate a large part of your student loans. You are required to work for little or nothing for a few years, but will have a lower student loan amount.

 


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