With the average debt for MBA hovering over $35,000 and average credit card debt for grad students at $8,500+, newly minted MBAs will need to understand how to manage their finances once they enter the workforce.

Unlike some other graduate programs, most MBA students worked before graduate school and had ample time to build up their credit scores. Plus, their debt load tends to be less than most other graduate programs — uh, probably because it’s shorter than most. They should know that private student loans impact their credit score in that they may open a credit inquiry.

MBAs probably understand that they should pay off debts in the order of highest rate loans first. I didn’t need Finance 101 to get this. From a pure financial perspective this makes sense. But, MBAs should consider that the order of paying off debts might vary if their goal is increasing their credit scores. Furthermore, I’ll conjecture that a high credit score might secure a better rate on a loan and that would save more money than the high rate card payoff strategy.

In general, student loans should be paid on time and you should put any extra funds towards credit cards first, then to other installment loans like car loans and finally to student loans.

As many MBAs in my program were non-US citizens, I want to point out my episode on building credit for expats.

Source: FinAid.org

Post from: Video Credit Score

MBA Students and Credit Scores – Episode #68

How are credit scores impacted by law school debt? What can someone expect in a credit score after graduating from law school?

There’s no proof that people who graduate from law school have higher or lower credit scores than the national average. While a law degree means lots of debt in most cases, students may have high paying starting salaries. This post is intended to help law students make sure they send their credit in the right direction.

The best time to start managing your credit score is before you start law school and before you start shopping for student loans.

Graduates in 2006 of public and private law schools had borrowed an average of $54,509 and $83,181, up 17% and 18.6%, respectively, from the amount borrowed by 2002 graduates, according to the American Bar Association. Net net, law schools usually mean lots of debt.

Law school loans will appear as installment loans on your credit file. You have two types of accounts on your credit file. Revolving accounts are credit cards and installment accounts which include home loans, car loans, personal loans and all types of student loans. Paying them off on time, or ahead of time will benefit your credit score the most.

Which should you pay off first? With more and more students graduating with credit card debt, this is an important question. Answer: Credit card debt trumps law school loan debt. If you have extra funds, pay off your credit cards first, then your other loans, then your law school and undergrad loans last.

With more of law students starting with work experience, building credit has already started for these folks.
Still for others, who have gone to school straight through or for they may need to get a bank account and consider a secured credit card to get started.

Post from: Video Credit Score

Law School Students and Credit Scores – Episode #67

First, a quick overview of financial aid programs. U.S. Federal funded financial aid is generally made up of the following programs

• Grants
• Scholarships
• Work
• Loans

Only the loans are going to impact credit scores. Financial aid packages have 3 types:

• No Loan Financial Aid
• No Cap Financial Aid
• No Loan Cap Financial Aid

No loan packages are fairly new. The university replaces the loan portion with grants and thereby lowers the debt load on the student. While some critics love these packages, others criticize them for being tough on colleges with lower endowments forcing them to admit fewer poor students.  That debate aside, these are likely to help students manage their credit better.

No cap packages place a cap on the loan amounts, often on a per year basis. Typically, schools will cap the loan amount to $2500 to $4000/per year, but it can vary. Again, this is done to lower the burden to students, and the intention is that the endowments will pay for shortfalls.  This type of financial aid also helps a student’s credit by capping the loan amounts

The two places where student loans and financial aid interact with credit scores are:

1. Credit inquiries. Some student loans check the parent’s credit score so they want to be aware of the timing of applying versus other credit needs.
2. Payment History.  Upon finishing college, your student loan payment history is reported and reflected in the credit score.

Check out the other student loan related episodes to learn more about how credit scores can be impacted.

Post from: Video Credit Score

Financial Aid and Credit Scores – Episode #66

This post is password protected. To view it please enter your password below:

Password:

Post from: Video Credit Score

Protected: San Francisco State University Students – Get Your Credit On!

This post is password protected. To view it please enter your password below:

Password:

Post from: Video Credit Score

Protected: Pepperdine: Get Your Credit On!

This video talks a about student loan types and how they affect your credit score. First, when you talk about various types of student loans there are several types:

1. government backed loans for students
2. government-backed loans that are for parents
3. private student loans
4. consolidation loans.

Let’s address these one by one.  Starting off with loans for students, credit scores aren’t checked because most students are not expected to have a credit history, so it wouldn’t be that useful in assessing risk. These loans are the Stafford loans and Perkins loans.

Next, parent’s government-backed loans. These are the PLUS loans — a parent loan for an undergraduate student — and in this case the credit of the parent is checked but the credit score matters little in the decision to approve a loan. Unless you’re late on a current loan then you’re probably going to be approved — they’re looking for the exact behavior that they’re trying to prevent on their loans. So, as long as you bring your loans up to date – even if your credit score is not good – they will probably grant approval.

Next, private loans. Private loans are not government-backed securities so you should expect these lenders are looking for little bit more risk protection and they definitely check your credit score.  But, often it’s not for a lend/don’t lend decision but rather for figuring out what rate to charge you based on your credit score and credit risk. This is why private loans can typically have higher interest rates than the comparable government especially if you don’t have a great credit score as they will push up your rates.

Checking credit scores when it comes to consolidation loans is mixed. There are some consolidation loans that check credit and there’s some that do not.   For example, Sally Mae’s Smart Loan does not require a credit score check and that is a consolidation loan. You really have to ask when you’re doing a consolidation loan to make sure the lender you’re using is either checking or not checking depending on what you’re looking for.

Post from: Video Credit Score

Credit Score Impact On Student Loan Applications – Episode #65

Student Loan Debt vs. Credit Card Debt

Which impacts your credit score more? Answer:  Student loan debt impacts your score less than credit card debt because installment debt hurts less than revolving debt.

• Student loans are an example of installment debt
• Credit cards are example of revolving debt.

You want to make sure that if you’re going to apply some accelerated payments, that you put these against your credit cards first. You want to lower the amounts owed on credit cards and then go after student loans. One more thing, while there are differences between these types of debts when it comes your credit score, in terms of your debt to income ratio which is a common ratio lenders use to make a decision about you, there isn’t a difference. They basically add up all your debt — your credit card debt plus your student loan debt — and make a decision on what your ratio looks like.

Post from: Video Credit Score

Student Loan Debt vs. Credit Card Debt. Which Impacts Credit Scores More? – Episode #64

Post from: Video Credit Score

Student Loan Shopping and Credit Scores – Episode #63

This post is password protected. To view it please enter your password below:

Password:

Post from: Video Credit Score

Protected: Credit Score Basics for Akron Law Students

This post is password protected. To view it please enter your password below:

Password:

Post from: Video Credit Score

Protected: Credit Score Basics For Syracuse Students