4 Tips On How To Manage Your Bad Credits For Students

Hey all 💜

I know that a low credit score can keep you from getting the best rates on loans and credit cards, leading you to pay higher interest rates or be ineligible for credit offers. You could also have a hard time getting approved to rent an apartment or get utilities. 

In some instances, a below-average credit score can also affect your job prospects. But if your credit score is lower than you’d like, it is possible to rebuild your credit and improve your score.

Know how much you owe and the terms of your loan contract(s), reconsider the grace periods, and evaluate capsulizing your debt if it makes sense.

When I was a student struggling with my class and financial management, I had no one to teach me through it. So I had to learn the hard way to cope between my personal financial and study loans but eventually, I got through it! 

There are also some ways to manage student loan debt including paying more than your monthly bill, sticking to a budget, consolidating or refinancing your loans, looking into loan forgiveness, and exploring different payment programs.

 

Here are some tips I did to help me overcome and recompense all my study loans without feeling too overwhelmed!

1. Calculate your total debt

As with any type of debt, the first thing you need to comprehend is the overall amount you owe.  Only by knowing your total debt can you set a plan to pay it off, consolidate it, or possibly explore forgiveness. 

Explore forgiveness means you can get a pardon or a lesser rate depending on your credit score.

In some circumstances, you can apply for the discharge of your student loan. Example: You could be eligible if your school closed before you finished your degree, you become totally and permanently disabled, or paying the debt will lead to bankruptcy. 

Another alternative you can try to explore refinancing to pay out the higher loan interest rate with a much more affordable one depending on your current financial state. 

Read this: How to recover your funds after the pandemic

2. Pay off your debt. 

However, I would recommend paying off your full balance to get rid of your debts. But if you can’t afford it, paying the minimum amount due can help you avoid late fees and even higher interest fees. 

However, it is advisable that you avoid defaulting on your debts and pay off your minimum monthly. Paying the minimum will slowly chip away at your balance, which will improve your score over time.  

There are actually a lot of other borrowing solutions for students to examine which is better for their own financial circumstances. 

Alternatively when your loan is paid off, apply the total monthly amount on that loan (the regular payment, plus the overage, plus the regular amount) towards repaying the debt with the second-highest interest rate.

This is a version of the technique known as a debt avalanche. I learned it from a friend. 

What is the debt avalanche method?

In contrast, the "avalanche method" focuses on paying the loan with the highest interest rate loans first. Similar to the "snowball method," when the higher-interest debt is paid off, you put that money toward the account with the next highest interest rate and so on, until you are done.

source from: www.wellsfargo.com

But remember, Paying down your principal balance and paying your loans automatically can help you reach your goals faster.

3.  Stick to your budget

This is to manage your own personal use and study loan. Set aside or plan accordingly on your daily, weekly, and monthly funding. Don't overuse any other credit-related loans such as credit cards. Limit your spending and try not to splurge on unnecessary items that could hurt your monthly payment towards the end of the month. 

A luxury lifestyle can wait. It's important to get yourself free of debt rather than bankruptcy, right? Try to keep most of your credit limit available. 

Also read: 5 simple changes you can make to your spending habits

4. Find alternative plans. 

Whether you are under a federal loan or private student loan, you may be able to call your loan servicer and work out an alternative repayment plan. Examples like Graduated repayment, Extended repayment, Income contingent repayment, or Pay as you earn.

Another way is that you may opt for an automatic pay deduction from your bank account every month without any fail to make payment loan dues. Some student loan servicers offer a discount on the interest rate if you agree to set up your payments to be automatically withdrawn from your checking account each month. This applies if you are already working of course.

I'm not sure if these terms apply to private student loans, but you can try it. While these methods and other repayment possibilities may well reduce your monthly payments, bear in mind that they may mean you'll be paying interest for a longer period too. 

Hopefully, these tips helped you to understand and try to manage your credit score a little better. Only some of these tips may bear fruit for you. But there's really only one bad option if you are having difficulty paying your student loans. It's better than doing nothing and hoping for the best. 

Well, that's all for now! Thanks for reading my blog !! I hope you've enjoyed it!

Have a wonderful day and always be happy!! 

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ZazaAzman a.k.a MamaMonsta👻