Your student loan should not get taxing on your credit

The student loan is a major concern for a good lot of American students in recent times. If we look at the stats, Americans were in $1.3 trillion loans (student) debt by the end of 2016. Worst is, the default or delinquency rate was 11.2% (around $147 billion) the same time. These figures only pronounce an alarming scenario for students across the USA.

It’s true that student loans are great to attain your degrees. However, we can’t deny how the debt comes in way of leading a fulfilling life in near future for much American youth. A rising loan burden translates to lesser opportunities of savings for the home, rent or any independent venture in future. Moreover, you would hardly have the basic required savings to start your own family. And in case, you are default or delinquent on your loan- it would spell disaster for your credit score. A lot of nations offer student exchange programmes. If you are getting a student loan to study abroad, them make sure your visa is in order suggest Singapore Immigration Solutions

Put simply, lack of control on student debt will go a long way in ruining your future plans & limiting your financial freedom big time. But then again, student loan does NOT necessarily mean the end of the world- provided you know what routes to take if you get delinquent or default on your loan.

How does this loan debt affect the borrower’s credit?

Akin to any loan, be it auto loan or mortgage, student loans too benefit & harm the borrower’s credit score. If you want to avoid the usual scenario of rising debt burden, make sure to pay all the required payments on time and in full. Timely payments improve the borrower’s credit score which consequently portrays him a credible borrower to future lenders.

Likewise, when you fail to make the due payments on scheduled time, you end up with a poor credit score. And lenders do not prefer borrowers with bad credit which means borrowing issues for you in near future.
Let us elaborate the situation. Missing or defaulting student loan payments take a serious toll on the borrower’s overall finances. We have already discussed about the difficulties in securing loans or credits in future with poor credit. Alongside, a bad credit score will dampen your chances of securing insurance, attaining a standard mobile phone plan and signing up for the utilities. Moreover, it might create issues in the employment sector as well. Some employers prefer to avoid applicants with debt issues. In fact, federal employees with such problems might be denied of their security clearance.

What will happen if the borrower can’t make timely payments?

Well, if you are late by 90 days, you would be tagged as “delinquent” and your status would be reported to 3 leading credit bureaus. If you have taken a federal student loan and could not make payments for as long as 270 days, you would be declared as “defaulter”.

What are the solutions if you are unable to make your student loan payments on time?

Now, we have reached the most important section of our post- the solutions for late repayments.
First, if you are having a hard time in securing repayments for your student loan debt, don’t go for “default” immediately. In fact, that should be your last resort.

Deferment/ Modified payment program

A smarter option would be Modified payment program or Deferment plan. Such a program is beneficial for the borrower as it can adjust the monthly payments on the basis of his specific income. Deferment enables the borrower to stop the payments for a brief while and it WON’T affect the credit score.

Loan forgiveness program

On the other hand, there are some loan forgiveness programs that will “forgive” the payments if the borrower works in certain careers. These include professions as teacher or something in public service.

What if you have to default on student loan?

Credit repair companies come to the rescue In case, you become a defaulter or delinquent, seek help from credit repair companies. Leading credit repair firms will effectively negotiate with the creditors to mend your credit. They will also make sure the borrower’s credit report stays accurate and fair. The entire proceeding would be done with due respect to the borrower’s legal rights as per the current consumer protection regulation.

In case, you are struggling with your student loan debt, credit repair experts from Lexington Law are ready to help you. We will take care of all the issues you are having with your loan payment record and credit report.

The Christian Post