Almost everyone has to obtain medical student loans to finance their college and university education these days. It pays to know how to get a student loan at favourable terms and conditions. The terms and conditions offered to borrowers taking out student loans vary enormously. Some borrowers might be offered very lenient repayment terms while others are on a tighter leash that does not allow much room for mistakes. There are many factors that determine the terms and conditions offered to a borrower. The most important one is the borrower’s credit score. A credit score is invariably referred as a credit rating. Both these terms are used interchangeably to refer to the same thing.
A person’s credit rating determines how they are treated by financial institutions. This is because a person’s resit rating determines how reliable or otherwise they are perceived to be by banks or other lending bodies. A good credit rating conveys confidence and enables the banks to exercise less caution than would otherwise be the case. The credit rating itself is not fixed and can be influenced in a number of ways. It depends on a number of variables that can themselves be changed to improve the credit rating for the better.
The biggest determinant of a person’s credit rating is the persons net worth. People with more assets have a bigger net worth and a bigger net worth translates into a better credit rating. Conversely, people who have more liabilities have a lower net worth and a lower resultant credit rating. The net worth of a person can be temporarily increased by borrowing assets and money in such a way that the borrowings are not reflected in their liabilities. A better credit rating enables a person to obtain more favourable terms when it comes to borrowing student loans. Favourable terms include smaller instalments, more gap between instalments, a longer repayment period, a lower interest rate, smaller penalties in case of default and an ability to renegotiate the repayment terms in case the borrower is unable to comply with the previously agreed terms.
A person’s past borrowing history determines their credit rating. If a person repays their loans regularly without delays and shortfalls, this reflects in a good way upon that person’s record. It is advisable to not default on loan repayments unless there is are unforeseen circumstances or unavoidable reasons. People who do not pay their loans on times have their credit score affected and have more difficulty obtaining newer loans when they approach banks or financial institutions. Another way to improve your credit score is to get a stable job. People with fill time jobs with fixed incomes have a better credit rating and find it easier to obtain favourable terms on loans. This is just one of the many benefits a stable employment brings.