Necessary Student Loan and Improving Credit Score

Anonymous · ‎03-01-2012

I know someone who has a poor FICO score of 615. That person is about to enroll in grad school and would like to graduate on time. He cannot afford to take the necessary classes per period, and opted to pay cash for 1 class per period. I suggested the option of getting a student loan so that he can graduate on time. However, he's worried that the loan will adversely affect his credit score, as he is trying hard to improve it.

Now, is it best for him to attend school part-time and pay cash for the classes? or take a student loan and graduate on time....but with a lower credit score?

Jazzzy · ‎03-02-2012

A student loan shouldn't hurt his credit score in the long run. He may have a minor dent at first because it would be a new account...but, in the end, it will show as a positive installment loan for many years and could be a benefit for him.

As to the decision of whether or not to take loans, have him do the math. Will he come out better by taking the loans, graduating sooner, and going to work to start earning a paycheck? Would he have to give up income now in order to take more classes? Figure out the pros and cons...but, no....the school loan may actually help his credit rather than hurt it.

Anonymous · ‎03-02-2012

Thanks for your advice.

Anonymous · ‎03-09-2012

The only way a student loan would hurt him is if he was ever late on payments when they come due. Most federal loans granted through the FAFSA website don't require payment until graduation. In fact, if he always keeps in good standing with the loans he gets through the FAFSA online application, it could actually reflect well on his credit score.

Chris123nTx · ‎03-17-2012

Im not real smart, but if i came out of a graduate.program later, but debt free, well, debt free is the winner everytime.

Just my opinion of course, an opinion formed by reading the horror storjes that populate this forum. Im thinking no one planned on having a student loan horror story, along with the new found attitude of thinking they should not have to pay the loans since they are too hard, so when debt free vs., student loan debt that will be there regardless of what else happens in life...