C wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.
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“Dear Steve,
I paid my way through college and fortunately could afford to take out only subsidized Stafford loans amounting to $10,000. After graduating I planned to find a full time job but have only found part time temporary jobs. I clustered these jobs over the last eight months and have been able to pay down my debt to about $7,500. Unfortunately my temporary jobs have run out and I am currently applying for work. I received my final pay check one week ago and have a dozen applications pending. The job hunt and hiring process can be lengthy and I don’t want to spend money on my monthly loans payments.
If I defer my loans until I get another job how will that effect my credit score?
C”
The Answer:
Dear C,
Do you know my good friends A and B?
See my answer to Pam Asks “Does a Deferred Student Loan Lower Your Credit Score” for additional information.
Bottom line, a deferment still lets interest build up but does not put the loan into default. So a deferment would be better than not in lean times.
The Answer: