Student Credit Card and Credit Education Blog

Many students become frustrated when they learn a cosigner is required when completing an application for a private student loan. Some because they’ve been on their own for a while now and don’t feel the need for a “babysitter” while others feel trapped because their co-signer options are severely limited. So why do lenders require a co-signer anyway? It’s simple, they want that warm and fuzzy feeling.

I guess the best comparison I can make is if your brother or sister ask to borrow a $100 bucks from you. That can be a risky proposition, right?  Now say Mom or Dad tell you they will guarantee that you’ll get your money back over a certain period of time, say 2 weeks with an additional $10 bucks in interest for fronting the money.  Wouldn’t that make you feel more secure?  Wouldn’t you lend those dollars with more confidence?  A bank works the same way.  A co-signer is the banks safeguard to ensure repayment, but a co-signer can also be your best friend too.

Co-signers often reduce the cost of borrowing.  An individual with strong credit history can help you receive better pricing.  Obviously the lower the interest rate that gets extended to you the better off you’ll be.  You’ll just want to make sure that both you and your co-signer do a credit check before you apply.  It always makes sense to review and fix your credit prior to applying for a private student loan to ensure you get the best rate available.

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If you are like me you probably graduated from college with two things; a diploma and a pile of debt. It is completely normal for students to have federal student loans and private student loans to pay off after college, but on top of credit card payments, rent and insurance payments these loans can be a huge burden. There are ways to quickly pay down your debt without getting overwhelmed. Here is the method that I use:

1: Figure out your monthly income and expenses including any student loan and credit card bills. This will allow you to see how much money you have left over after the bare minimum is paid.

2: Pay at least the minimum payment on all of your debts each month. Missing any payment can negatively affect your credit score. A poor credit score will makes it hard to rent an apartment, buy a car and take out any kind of loan in the future. Additionally, if you put off making payments you will end up getting slammed with interest in the long run.

3: Without neglecting any other living expenses and a modest savings plan, use any extra money to pay off whichever debt has the highest interest rate. If you have a lot of credit card debt it is probably best to pay that down first. Once your credit card debt is paid off, try not to accumulate any additional debt. Once your first debt is paid you can move on to using your extra money to pay off whichever student loan has the highest interest rate and so on until you are debt free.

ScholarshipPoints Bonus Code: PAYDOWNDEBT

From Student Loan News, Updates and Blog Posts » Credit Cards:

As you head back to school, some back to school financial aid tips…

Avoid credit reps on campus. You don’t need that free t-shirt, and a lot of inquires can hurt your FICO score.  (Your FICO score is used to determine your eligibility for student loans and other credit products.)
Make a budget BEFORE [...]

Originally published by Student Loan News, Updates and Blog Posts » Credit Cards.