I have a great credit score (mid-700’s), nothing negative in my credit history, 10 year credit history, 10 open credit cards, have paid every single credit card bill in full on time my entire life, 2 car loans, mortgage.
With interest rates at historic lows, I’m looking to refinance. However, I’m finding that I can’t get the best rates out there because I don’t have an excellent credit rating. One way I’m researching to improve my credit score is by obtaining a student loan, something I’ve never done before (I never went to college).
1. Will it help my credit score at this point if I get a student loan?
2. Am I able to get a student loan without going to school?
3. Am I able to pay off that student loan immediately, so as not to have to pay interest?
4. Will that help or hurt my credit?
STOP! Don’t do that!
Student loans are among the worst type of debt you can own. If you run into trouble you are almost locked into a life of financial servitude with them.
There are a lot better ways to improve your credit. The student loan idea would be the one I’d never, ever, suggest or recommend.
A mid-700 sore isn’t horrible. Before you do anything I would suggest you get a copy of your consolidated credit report with the credit score. We need to give your credit report, all three of them, a thorough going over to look for any errors or reasons why your score is what it is.
You can even get a free credit score through CreditKarma.com but it’s only a one bureau score. Nevertheless it will give you some feedback about why your score is what it is.
One thing that can be bringing down your score is the number of open credit cards. The sweet spot would be to have three or four at the most open. I would keep the three or four you’ve had open the longest, and close the rest. But those three or four need to be major credit credit cards, not store cards. Store cards are not helpful in building great credit.
And if those three or four have the highest interest rates, who cares? Since you pay the balances in full anyway you are paying no interest.
Get the consolidated credit report and look for any errors or inaccurate information being reported about you. Get your credit score and let me know why the score calculator says your score is what it is.
But one thing I do know for sure, DON’T GET THE STUDENT LOAN! And yes, I am shouting that.
Please post your responses and follow-up messages to me on this in the comments section below.
You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
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