Post-college life gets crazy faster than you can imagine, and managing your debt load and building credit can easily fall by the wayside as you search for a job, start paying on student loans, find a place to live, and get out into the real world. The thing is, when it comes time to rent a place, apply for employment, or buy a car, a high credit score can be your best friend.
Bobby Hoyt graduated from college with a little under $40,000 of student loan debt and had no idea what his credit score was. But this former high school music teacher from Plainwood, Texas, made some smart and sensible moves to pay down debt and boost his credit rating at the same time. Hoyt, 26, shares how he did it.
“I’m really cheap”
If there is anyone out there that understands how much of a struggle your finances can be during the post-college part of your life, it’s me. I was a high school band director, and I lived on a teacher’s salary. Somehow, I actually managed to pay off my student loans in less than two years.
There really isn’t any secret of how I was able to pull it off other than this: I’m really cheap. I drove the same car I had in college, I made the biggest payments I could toward my student loans, I didn’t buy new shoes or clothes like everyone else around me, and I found the cheapest place to live that I possibly could.
Other than being debt-free, I saw an added benefit by paying off my loans the way I did. Within two years of working a full-time job, paying down debt combined with other moves, like making my payments on time, helped me pull a 790 credit score (I was just as shocked as you are).
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I regularly started checking my credit report after college, and saw how making my loan payments on time was moving my score up. I also learned about the different types of credit that lenders take into account, like revolving credit and installment loans. It was helpful to see how my credit picture was laid out for lenders.
Start paying on your student loans sooner than you have to
This advice is something that I actually didn’t know until after graduation, but I wish I had. The first thing you’ll find out about your student loans is that there is a “grace period” that allows you to delay your loan payments for up to six months after college. However, if you can, making payments right away allows you to cut back on the amount of interest that accrues on your loans. The grace period sounds awesome, but interest is accruing while you aren’t making any payments. For me personally, if I had realized this sooner, I could have saved myself a substantial amount in interest charges just by making small payments right away.