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Unfortunately, there’s no one clear answer to this question. Whether student loans affect your other loan approvals ultimately depends on your debt to income ratio at the time of applying for the loan. When creditors try to determine if they should loan you money, they look at your debt to income ratio among other indicators.
Understanding Debt To Income Ratio And How It Affects Your Loan Approval
Your debt to income ratio is the total amount of money you owe every month versus your gross monthly income.
Most financial institutions will approve your loan application only if your debt to income ratio is 43% or lower. That means your income per month is more than the amount of money you owe every month.
With that said, your student loan does not have to be calculated into that rate. Therefore, your student loans will not cause you to be denied a loan.
Use Student Loans to Build Credit
One way you can use your student loans to get easy approval for other loans is by making sure you make your payments on time every month. Timely student loan payments are one of the best ways to maintain or improve your credit score. As everyone knows, the better your credit score, the easier it is to get other loans approved if and when you need them.
If you can’t keep up with your monthly payments, check to see if your loan provider has other repayment plans. Alternatively, consider refinancing or consolidating your student loans. Doing so could get you a lower monthly payment or a lower interest rate. You don’t want to end up deferring on your loans and negatively affecting your credit score.
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