Paying on Time is Important

Did you know your student loans are included on your credit report as soon as you open them? Your credit report basically a compilation of most of your financial accounts. It includes information like your current balance and whether you've paid on time.

Whenever your student loan payment is late, your credit report is updated to reflect the late payment. When you make a future application for a credit card or loan, the lender will check your credit report and see that you were once late on your student loan payment. That late payment could get your application denied. Or, if you're approved, you could get a higher interest rate.

One late payment will make it harder to get caught up because next month, you'll have two payments and a late fee to pay. The more payments you miss, the more money you'll have to pay to get caught up.

Late payments could forfeit any interest rate incentives your lender offers. Some student loan lenders give a lower interest rate if you make a certain number of timely payments. For example, you might get a 2% decrease on your interest rate if you make 48 consecutive timely payments. Well, one late payment would reset the clock on that incentive and could even forfeit your chances of getting the interest rate reduction all together.

If you're having trouble making payments, contact your lender as soon as possible to make payment arrangements. You may be able to have your due date extended without penalty.