5 Ways To Restore Your Credit With Six Figures of Student Debt
Written by
Chris Adam
Edited by
Molly Sullivan
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Student debt has been in the spotlight a great deal this past year. While the debate continues over forgiving student loans, there are ways you can use your education debt to your advantage.
Here’s a look at five ways to restore your credit with the strategic use of your student debt.
1. Help Your Credit History
Did you know student loans can help your credit history? According to Chase, “Student loans offer an opportunity to show that you can make regular payments on your debt — the main component of your credit score and a sign that you are a responsible credit user.”
Making payments on time will help you in a number of ways. One of the most important is that it’ll help you establish a positive payment history over time.
2. Make Small Payments
Speaking of making payments, while you are probably able to wait until after you’re done with school to start, it can help your credit to make small payments as a student.
“In fact, making interest-only payments could help you save money in the long run — unpaid interest will be capitalized and added to your loan balance once you enter repayment after graduation,” according to Experian.
3. Use Autopay
You may want to try to set up automatic payments for your student debt. In addition to helping you better manage finances, these auto payments could help you secure an interest rate discount.
4. Increase Your Average Account Age
Your credit history is important — a longer one shows lenders you’re less of a risk than someone with a shorter credit history. That means starting early, like with student loans, increases your average account age and demonstrates you’re financially responsible.
5. Get a Good Mix
Have you heard that having a good mix of debt can help your credit? That means that having student loans, along with credit cards, home loans and other credit in your name, helps your credit score. It shows you’re a consumer who can deal with many different financial demands — thus reducing your perceived risk as a borrower.
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