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New Member
Posts: 6
Registered: ‎05-28-2008
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Using Student Loan to Boost Credit Score

Hello everyone,
 
I have a somewhat unique situation. I currently could pay for college in all cash (like I have been doing for the past 4 years), but now in my senior year I finally have gotten wise to apply for some aid. I have been offered 5K in sub'd fed loans. I am thinking about excepting these loans as basicly a 0% interest loan for 9-12 months (depending on the semester). However, I was wondering how I could pay these loans back and gain credit score; maybe sending a monthly payment while I am in college to show payments on my report then PIF as soon as the no interest runs out (deferment until 6 months after graduation).
 
Anyone have any experience with this? Anyone can list the pros and con's to taking this loan?
 
 
Thank you,
Charles
 
 
Moderator Emeritus
Posts: 9,252
Registered: ‎03-19-2007
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Re: Using Student Loan to Boost Credit Score

Do you have any open installment and revolving accounts? 
 
New Member
Posts: 6
Registered: ‎05-28-2008
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Re: Using Student Loan to Boost Credit Score

I have no installments currently. I do however have a discover card that I have carried a balance on for the past 10 months, and I just opened a BoA card that I will be making payments on for the next 12 months. Both cards were 0% interest offers so I never PIF'd. Other then that I have no other credit (besides pulls from my Apartment complex, Verizon Wireless)
 
Thank you,
Charles
Moderator Emeritus
Posts: 9,252
Registered: ‎03-19-2007
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Re: Using Student Loan to Boost Credit Score

While an OPEN installment TL may provide a score boost over time-
 
I say $'s over FICO any day of the week-
 
If you can pocket a few bucks- go for it, 
I will say that having an installment account open under 1 year will only add to positive payment history-  the point gains are really over 1 year. 
Member
Posts: 9
Registered: ‎03-29-2008
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Re: Using Student Loan to Boost Credit Score

[ Edited ]
As a general rule, don't take out student loans you don't absolutely need while in school. Credit takes time and you probably won't get as much out of starting student loans as you would with a credit account.

If you need a new laptop or something for school, and qualify for financing through a computer vendor, just finance through one of those comanies and pay that off gradually as you go through classes. That way your credit will build.

Student loans won't go to payback and affect your credit positively until after you graduate. Follow?

Message Edited by Timothy on 06-30-2008 07:38 PM

Message Edited by sbrownla on 07-01-2008 10:27 AM
New Member
Posts: 6
Registered: ‎05-28-2008
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Re: Using Student Loan to Boost Credit Score

That makes sense, I guess I will just use it as free money. Worse case scenario is I make $100 (3% interest for 9 months of 5K). I dont need the money at all, I have the cash in hand........but I was always told why use your money when you can use the banks money.
 
 
Thanks for the help,
Charles
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