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How Credit Debt Could Have a Negative Effect on Your GPA

Blog Post02/11/2016
Debt Management
How Credit Debt Could Have a Negative Effect on Your GPA

Late night parties, study cram sessions and blowing off class can all affect college GPAs (Grade Point Averages), but what about credit card debt? Allowing yourself to become burdened by credit debt can hurt your college GPA in the long run. Planning your spending allows you to avoid the pitfalls of excessive debt and help improve your chances of handling the responsibilities of school.

Financial Stress Can Lead to a Lower GPA

College students have plenty of stressors on their plate, even without considering financial obligations. Carrying credit card debt can add on extra financial stress. Unlike student loans, which generally allow borrowers to defer payments until after college, credit cards require borrowers to make monthly payments — and usually charge higher interest rates than federal loans

Potential for Reduced Courseloads

Being swamped with credit card debt may require you to take on enough work hours to pay off your balances, which can hamper progress in school. The time required by a job can reduce the amount of courses a student takes, which could potentially lead to a delay in graduation or poor academic performance. If students have to switch to part-time status, retake courses they failed or take a break from their studies altogether — it will take longer to earn their degrees.

Benefits of Credit Cards

Just because racking up credit card debt can damage your GPA doesn’t mean that you should swear off ever getting a credit card. If you can manage your spending, getting a credit card while in college can help establish a credit history.

If you pay your bills on time each month, it will also make you a more attractive borrower in the future when it comes to getting larger loans, such as car loan, or even applying for a rental. However, if you don’t pay on time, or can’t control your spending, you’ll likely damage your credit history and potentially your GPA, too.

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What You Need to Know:

There are various types of credit scores, and lenders use a variety of different types of credit scores to make lending decisions. The credit score you receive is based on the VantageScore 3.0 model and may not be the credit score model used by your lender.

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