Education Loans pave a pathway towards your studying abroad journey by reducing your financial burden. Having a good credit score can also contribute to reducing your burden as it portrays you as a responsible individual in the eyes of lenders which in turn affects your loan’s terms, interest rates, and eligibility.
Before proceeding any further, let’s know more about Credit Score.
What are Credit Scores?
A credit score is a three-digit score provided to the lenders which signifies how responsible they are with financials specifically loans. It is determined by three credit bureaus and each of the bureaus determines a number that is based on your past loans, credit cards, and payment history.
The number ranges between 300 and 850 in the general scoring models and determines how likely you will be to repay loans as you have displayed in the past. It depicts your financial capacity and stresses over the fact that you are responsible enough to repay the loan.
Also Read: Check out if you can get a Study Abroad Education Loan with Low Cibil Score?
How does it affect your Student Loan?
Credit score matters for students as well as credit score is one of the major factors that determine the amount of loan a student can avail. The higher your credit score is, it is more likely that you can receive a better interest rate and loan term as credit scores are associated with risk.
Having a low credit score may demonstrate that you are not going to make your monthly payments on time.The utility companies also check the credit score to determine if one can afford to repay housing or tuition fee. Poor credit score can lead to withdrawal of a potential offer.
Also Read: Find all answers on Personal Loans for Education
How can you build and manage Credit scores for International Education Loans?
If you are planning to avail an education loan and have a credit card, it is your time to take some proactive steps to ensure a favourable loan term and interest rate. Given below are some steps to do it.
Start Now – Building your credit score is one of the essential steps so it is advisable to start now. If you don’t have a credit card, get one and make timely payments to ensure a positive credit card history.
Use credit card responsibly – Avoid accumulating excessive debt and make sure you make payments on time if you have debt.
Maintain consistency- Regularly check your credit report and look out for discrepancies and errors. Get the discrepancies corrected if you get any to have a spotless credit profile.
Plan your finances – Don’t forget to plan an estimated budget and get a fair idea of your expenses. Spend wisely and do not overdo it. This will definitely help in estimating your budget for availing of education loan and repayment.
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