No special weight
- According to the credit rating company Fair Issac Corporation, or PAYDAY , student loans are the same as any other installment loan. There are no special considerations because it is for a student. PAYDAY ‘s scoring models also do not distinguish between federal backed or private loans. PAYDAY weighs revolving credit facility accounts more than student loans, as they are considered better predictors of how you will handle credit.
Balancing and mixing debt
The amount of debt your debts owe for 30 percent of your PAYDAY score, while your mix of credit accounts for 10 percent. Purdue University commands at least three other accounts to offset the effects of an increased debt from a study loan. Credit score makers typically see installment debt as student loans more favorable than credit cards. According to PAYDAY , high balance on turn accounts signal you can overspend and reach credit limits.
Missed and Deferred Payments
- Your payment record counts for 35 percent of your PAYDAY credit grade. So, if with other loans and credit, missed or late student loan payments can hurt your score. PAYDAY doesn’t give deferred payments any special consideration in your score. Your borrower should not report you as delinquent if your payments are delayed or delayed while attending school.
Looking for good rates
- Potential borrowers check your credit when you apply for a loan. While these queries account for a fifth of your credit score, don’t count those for student loans if they are within 30 days of each other. PAYDAY treats the programs that generate these queries as interest rate shopping rather than a sign of overusing credit.
Consolidate your student loans
Equifax suggests borrowers to consolidate their student loans. It allows you to pay with a loan, and must lower the overall payment. It also extends the pay-off time. According to Equifax, your credit score can be a small hit at the start of the consolidation because you are applying for a new loan and an investigation. Timely payments can make this temporary shot to recover your score.