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Articles » What Is A Good Credit Score | | The Advantages of Being a Student in Improving One's Credit and Obtaining Loans |
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There are a number of advantages to being a student when it comes to improving your credit and obtaining loans . The system is set up to accommodate you and provide you what you need to get through your college years and become financially successful. Many companies offer student credit cards , deals on cell phones and plans, deferred payments, and of course, you are income tax exempt if you’re going to school full time.
So how does all of this help to improve your credit? Some of it is obvious. Getting a credit card while you are a student and paying your bill on time is a credit builder. The same can be said for the cell phone. You can get a good deal from many of the phone companies out there and establish a history with them for when you get out of school. Deferred payments can also help. Student loans are not due until after you graduate so the open line of credit and payment histories won’t show up on your credit report.
Then, there is the tax-free thing. Federal income tax is 15.3% of your annual income. As a full-time student, you are exempt from having to pay it. That percentage can add up to thousands of dollars over the course of four years that you can use to pay off any outstanding balances that you might have. The extra cash can also eliminate the need to borrow money to pay for college essentials like books and lab fees.
Lending institutions look at all of these elements when you apply for a loan. As a student pursuing an education in a specific career path, you are considered a good risk. Your credit cards and phone bills will be on your credit report and raise your FICO score . The fact that you are tax exempt raises the amount on your income statement because most lenders look at net, not gross. There are also state and federal tax benefits and incentives for lenders who do business with students, so you have a pretty good shot if you’re applying for a loan.
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