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Are You Credit Ready and Credit Worthy?
1 December 2010
As you think about pursuing a health sciences career, questions about how to pay for your health sciences education may not be far behind. In considering your options to pay for school (and there are many), you may also want to consider not only the impact your credit may have on your ability to get student loans, but also on how repaying your student loans in a timely way can positively impact your credit and your credit score. The latter can have a tremendous impact on your ability to secure financing to help start your practice or buy into an established practice after you graduate, not to mention your ability to get a mortgage, buy that new car you may need, and even get car insurance.
Consider the following as you think about how your credit can impact your health sciences career:
Credit Ready and Credit Worthy
First, Federal Stafford Loans (one of the main loan programs many health sciences students use to help pay for school) are not based on credit. However, for some students, Stafford Loans may not be enough. Therefore, there are two terms you should be familiar with:
Credit Ready means you have no credit history or your credit history has no adverse items such as 30 and 60 day late payments.
Credit Worthy means your lender is going to dig deeper into your credit history, perhaps looking for a minimum credit score and a debt-to-income (DTI) ratio that indicates your current income is enough to sustain loan payments.
A lender making private loans may use a combination of credit ready and credit worthy requirements when determining not only your eligibility for a private loan, but also the interest rate for the loan and any origination or other fees you may be charged.
Important Changes in the Credit Card Industry
Second, recent changes in the credit card industry help us better understand the impact credit card debt has on our decision-making:
These changes may actually help force you to stick to a budget by limiting your spending and providing some serious reminders about how costly credit card debt can be.
Credit Cards and Financial Aid
Finally, remember that consumer debts, including credit card payments, cannot be added to the cost of attendance at your health sciences school should you apply for financial aid. When the Financial Aid Office determines how much money you will need and what kind of financial aid you are eligible for, they can only include those expenses directly related to your degree program, such as tuition and fees, books and supplies, and living expenses. Therefore, be sure you pay off any consumer obligations, including credit card balances, in full before you matriculate.
For more information on credit and the recent changes, you may find the following Web sites helpful:
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Last updated: December 20, 2013
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