According to a study from Pew Research Center, 22.4 million households, which accounts for 19 percent in America, were facing college debt in 2010. The number of households facing college debt in 2010 was double the amount that was reported in 1989, and 15 percent above numbers reported in 2007. With student loan debt having a detrimental affect on credit scores, MSN recently released an article to help Americans who are struggling.
The cost of an education can be scary these days, as the debt for student loans increased to an all-time high and has left many Americans unsure whether they will have the chance to say they are free from student loan debt. While it's best to pay off the debts on time, this isn't a possibility for many Americans who are balancing lower wages and have other bills to pay.
According to a FICO study, consumers carry a greater amount of student loan debt today than they did seven years ago. In 2012, the average student loan debt was $26,500, which was a 54 percent increase from the average of $17,200 in 2005. The study also estimated that a million consumers in the country owe $100,000 or more in student loan debt.
MSN detailed exactly how student loan debt can have an effect on credit scores. One of the most important things a consumer can do is to pay student loans on time, which looks good on their credit score. Some Americans believe they can be more relaxed with government-issued loans because they are treated differently, but this is not true. Government-issued loans can be just as damaging to credit scores if they aren't paid on time.
Student loans that are reported to the rating agencies as deferred are still considered, even though the status is not viewed as being negative or positive. Americans should keep this in mind when trying to secure financing for a major purchase, such as a house or car.
Another thing the source suggests to keep in mind is that student loans are usually reported as installment loans, when repayment is made in fixed monthly amounts. While student loans can still have an effect on credit scores, they usually have less of an effect on a score than balances on revolving accounts, such as credit cards.
Americans are also encouraged to build up their basic savings to have money saved away for a rainy day. With the holiday season being upon us, properly managing funds should also be practiced.