Why Are Student Loans so Important

Since the cost of undergraduate, graduate, and professional education continues to increase, students are taking advantage of low cost federal student loans. According to the Project on Student Debt and the College Board's Center for Economic and Policy Research, approximately two-thirds of recent graduates have a student loan debt and over the past decade, student debt levels have more than doubled.

These numbers proves that many students start their careers with significant debt before they've had the opportunity to build a solid credit score. Since public academic institutions continue to face budget cutbacks and tuition increases, students may have to count more heavily on student loans and credit cards to get by; this may have negative consequences for students' credit scores and may actually delay or change career plans.

Career Transitions and Your Credit Score

If you're taking in consideration a mid-life career change, a good credit score can help you receive financing for the transition to a new career. It's good to weigh short and long term financial goals when considering taking on student loan debt. Talking with a financial advisor can help structure a plan to fund your career transition while protecting your credit score.

Knowing All About Student Loan Debt

Unfortunately, it can be tempting to borrow more than you need for educational expenses. And it is not exactly hard to forget that unlike grants and scholarships, student loans have to be repaid, which can lead you to have financial problems and damage your credit before you even get the chance to establish a good credit history. Late payments and collection activity on student loans leads to low credit scores--especially if, like most students, you have a short or limited credit history. A low credit score can limit the availability of some student loans and other types of credit including mortgage loans.

The Impact of Your Credit Score on Your Career

A dirty credit history can not only make it difficult for you to get accepted for loans, it could even destroy your career plans. Low credit scores can limit access to business loans and prospective employers often make background checks that include verifying your credit score. When you interview for jobs you may be asked to sign an authorization that allows prospective employers to verify your background. Employers in the financial and retail industries and professions such as accounting and law typically use background checks as step of the hiring process, and a low credit score is a valid reason to deny employment.

Careful use of student loans can help with your education and help avoid unnecessary debt. Managing student loan debt through prompt repayment and possibly consolidation can help establish a good credit score. Your education and credit score can open doors to your new career, and later, help you get financing for expanding a business, starting a company, or investing for your future.

Visit credit report for more information.