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Credit and Student Loans

Step 1: Know what you borrowed, from whom you borrowed, and who services the loans.

Step 2: Know the "relative cost" of your student loans.

Step 3: Know your grace periods, deferment options, and forbearance options.

Step 4: Know your "decision points" and keep a calendar.

Step 5: Run the numbers before choosing a repayment option of consolidating your student loans.

Step 6: Commit to keeping good records.

Step 7: Keep a budget and know when you need the help of a financial professional.

Step 8: Know and use your support systems.

This section may be somewhat after-the-fact for residents; by the time a resident reads this information, he or she may have already borrowed through a credit-based private educational loan or through the HEAL program, which was also based in part on credit. However, timely repayment of student loans is a great way to show future creditors evidence of responsible financial behavior, behavior which will be reflected on the borrower's credit report and which will be used by creditors to help determine a borrower's eligibility for future borrowing needs.

Borrowers may want to know the difference between being credit ready as opposed to being credit worthy. Credit ready usually refers to a borrower who either has a) no history of consumer obligations or b) no adverse credit history such as delinquent consumer payments, charge-offs, bankruptcies, federal liens, or defaulted student loans. Private loans and HEAL loans are based, in part, on a borrower being credit-ready.

Credit-worthy usually refers to someone who has income to support loan payments, as well as no adverse credit history. Residents who try to finance a mortgage, a car, or some other major purchase, will likely be subject to a credit-worthy test. Therefore, their credit history and history of student loan repayment will definitely impact their ability to show credit-worthiness to future creditors. Some rental offices may also run credit reports on borrowers who are simply trying to rent an apartment during their residency years.

Residents should file deferment forms or to request forbearance in a timely way, to ensure their student loans remain in the proper repayment status so that their credit is not adversely affected. In addition, residents may want to secure a credit report to be sure it is accurate, in preparation for future borrowing. You can secure a copy of your credit history by contacting one of the following agencies:

Experian (formerly TRW)
Post Office Box 8030
Layton, UT 84041-8030
(888) 397-3742

CSC Credit Servicers (Equifax)
Post Office Box 674402
Houston, TX 77267-4402
(800) 392-7816 or (800) 685-1111

Trans Union (TU)
Post Office Box 390
Springfield, PA 19064.0390
(800) 888-4213