Student loans were formulated with an aim of aspiring the provision of higher education to all students ready to advance their levels of educations. It has supported millions of students over the past few decades and greatly supported the promotion of a highly educated society that values education, growth and development.
Student loans have however over the past few decades become a burdening task to overcome for majority of these students. This is mainly caused by the tough times of finding job positions once they have graduated as their need to fulfill their desires of the next steps in life of being able to support their own families. Another factor that can lead to the extension of paying back these loans in the shortest amount of time possible after graduation is the acquisition of unexpected expenses such as healthcare expenses especially if one undergoes a surgery. Thus, these students’ loans have managed to become one major financial problem that the society is finding harder to eradicate from their lives then resulting to the eventual forgiveness of the loan. This is to mean that the loan is no longer charged for payment to the students and this is transaction is declared on your credit card accounts.
Effect of student loan forgiveness to your credit
In as much as it is very relieving financially, emotionally, mentally and even physically to have this loan forgiven and have your student loan debt completely eradicated without having to pay an extra penny, this action does reflect on your credits. This will wrap several effects that could reflect on your credits in a positive or negative way as follows:
1. The credit scores will not be affected should your student loan be forgiven. Thus, you do not have to worry about any points being taken out and neither will there be any points rewarded either from this transaction. Your points will remain the same until you top them up.
2. If you ever need to take up a loan in the future, your lender will look at this forgiven student loan and this will influence the lender’s decision to either be confident enough to lend you the loan or not. On one side, the lender will feel discouraged at this record as they will wonder whether or not you are responsible enough to take such huge responsibilities or not.
3. If you have ever made any late payment without a good reason why, such as your health worsened thus placing you in a position of not being able to work and make due payments as expected. Lenders will tend to bend their arms towards such reasonable excuses due to the limitations present at the time and will feel more confident to approve your current loan application. However, if there really is no good understandable reason then this arises a good level of doubt of whether you can manage your credits or not.
4. There is another positive side to the forgiveness of student loans as acquiring them in the first place circulates a good credit score and not paying them back fast enough makes the score go even higher than before such that by the time the loan is forgiven you have already managed to enrich your credit account with affable score records. This is good to show to lenders when getting another loan as it indicates proper management of credits given.