Student Loan Shopping Could Damage Creditby Tim Manni
Shopping for student loans could negatively affect your credit score. Consumers who comparison shop auto and home loan rates over a brief period of time won’t notice a drop in their credit score. So why are student loan shoppers’ credit scores being docked for searching for the best rates?
When college financial aid officers got into trouble last year for accepting gifts from lenders, the moral of the story was clear: You could easily overpay for your student loan by simply borrowing from a college’s recommended lender without first shopping around.
There is just one problem with comparison shopping for a private student loan. Doing so may damage your credit score. Since lenders quote higher interest rates to applicants with lower scores, some students could end up paying thousands of dollars more in interest over the life of their loans.