07-13-2014 05:48 PM
Hi there, I posted another topic in the general credit card discussion board... I am extremely new to credit and anything of the like. I'm an 18 year old college student who's looking to move out and get her life headed in to right direction, and a huge part of that is having a good credit score. I was recently approved for a capital one credit card for $300, I'm very happy about that. I've been keeping up on my payments and hopefully they'll give me a little bit more credit after the upcoming five months of on-time payments... I was also approved for a federal student loan by my school of $10,000 for the '14-'15 school year. My main question is, how does this affect my score? My loan specifies that I don't have to repay any loans until 6 months to 1 year after I graduate, however, would it reflect badly if I did wait that long? Should I start repaying my loan throughout my school year?
I'm the type of person who likes to plan ahead and know what to expect... and I'm really not sure what I'm in for, that's why I'm inquiring about it. Can anyone give me advice and/or information from their past/present experiences? Thanks!
07-13-2014 06:45 PM
Do you need the loan? If your goal is just to build credit, I would reccomend taking a small amount ($1-2k perhaps) in subsidized loans if possible, and letting the money sit in a savings account throughout your schooling. Then, you can pay the loan back after four years, and because it was subsidized, you will owe no interest.
While you are in school, your loans will be deferred. During that time, they will report as "paid as agreed," so there are no negative credit effects from not making payments. The only reason to make payments while you are in school is to pay off your loans early, and to avoid paying interest on your unsubsidized loans.
The best plan? Only borrow what you absolutely need. If you don't need anything, and there are some subsidized loans on offer, go ahead and borrow a reasonable amount and take advantage of the paid interest to build some installment credit history for free. Otherwise, just keep building your credit with your new card, and by taking on loans when/if you need them and paying them back responsibly.
07-13-2014 07:35 PM
Unfortunately I do need the loan, I took out the full $10,000 in hopes that could cover both my fall/spring tuition and the rest I could put in savings and make regular payments while I'm in school. And thank you for all of that information.