A successful career is built on a solid foundation of higher education. However, the price of a good education has increased significantly in the modern era. The only option left to the general public in these situations to pay for their higher education is the availability of educational loans or student loans. Introduction Applying for an education loan is simple, regardless of whether you want to continue your education in India or abroad or simply return to school after a break. The eligibility for education loans and other requirements for obtaining a study loan have been established by banks and other financial institutions. The reputation of the college or institution, the course, the student’s academic record, collateral security against the loan amount, income, and the parent’s credit score and credit report are among the factors determining your eligibility for an education loan. We’ll talk about how student loans impact your credit score in this article. But first, let’s clarify everything regarding credit reports and scores. A like blog – How Much Money You Need to Buy a House What is the significance of a credit score, and what is it? A credit score is a three-digit figure that represents your creditworthiness and varies from 300 to 900. The four main credit bureaus—TransUnion CIBIL, Equifax, Experian, and CRIF Highmark—assemble data from banks and other financial institutions to create credit reports and scores. Banks and other financial institutions analyze an individual’s creditworthiness using their credit score. The banks will lend you money more readily if your credit score is higher. Does a student loan affect your credit score? Yes, a student loan affects your credit score because it is a debt product as well. Your credit score will drop if you default on your education loan or student loan, just like you would with other loan products like personal, auto, or home loans. Education loans typically have a moratorium period before the loan is repaid, which begins one year after the borrower completes their coursework or six months after they find employment, whichever comes first. As soon as you finish your course or receive your first paycheck, you should begin repaying your education loan. With a loan EMI calculator, you can obtain an estimated monthly payment for your education loan in advance. Making timely payments on your educational loan can improve your score. For most people, a student loan or education loan may be their first experience with credit. Student loans, in contrast to other loans, have a moratorium period, which allows you to pay only interest for a few years, during which you have to repay the loan. However, as soon as the moratorium expires, you should begin making your timely education loan EMI payments. Your credit score can rise if you make timely payments on your education loan. You are able to improve the credit mix. Having a variety of credit types, such as home, education, auto, personal, and so forth, is referred to as having a credit mix. A healthy credit mix comprises both secured and unsecured loan amounts. Depending on your loan’s terms and conditions, a student loan may be an unsecured or secured credit. A like blog – When will digital currency replace money ? Assists in establishing an extensive credit record Education loans have a maximum loan term of five to ten years. Repaying your educational loans on time will help you establish a solid credit history. A long credit history is beneficial for establishing a high credit score. However, you should always consider the advantages and disadvantages of doing so and make the appropriate choice if you are able to pay off your education loan earlier. Conclusion Finally, do not make insignificant mistakes that could jeopardize your future career as you take out a student loan or education loan to launch a successful career. To establish a credit score and report, you should always be accountable for the credit you take out and repay your debts on time. On CRED, you can check your credit score at no cost. A like blog – 2023 Tax Filing Guide Post navigation How Much Money You Need to Buy a House
