If you’re a student or working full time, you’re going to need to pay back a student loan at some point.
If you’re an independent contractor, you might not have any options for getting a loan off your credit cards, but that’s not the case for most people.
You can use your student loans as collateral to pay off debt from your employer.
To learn more, we spoke to Dan Leavitt, a bankruptcy attorney in Portland, Oregon, about what he recommends as a way to protect your credit rating, and the best way to keep your credit score stable.1.
Make sure you have a good credit historyYou need to keep a credit history if you want to keep credit card accounts open and active.
This includes your income, spending, debt, employment history, and other credit information.
“You want to have a solid credit score to be able to open up new accounts and pay bills,” says Leavit, who specializes in bankruptcy law.
“There’s no reason to put yourself at risk for an inaccurate score.”2.
Know when to take out a loan and when to stopBankruptcies attorneys generally recommend that you take out at least one loan every few months to cover any unpaid bills.
The idea is to prevent you from defaulting on your loans, which would put you in a financial bind.
Even if you do decide to stop paying back your loans early, you can still keep them open, since they aren’t going to disappear anytime soon.
Leavits advice: If you haven’t already started making payments, make sure to pay it off within 60 days.
“If you take a longer period of time, it can cause you to default and potentially make it harder for you to pay the debt off,” he says.3.
Keep a bank balanceYou’ll want to be on the lookout for a good bank account.
A good balance is a good indicator of your creditworthiness.
You should always have a bank statement available on your phone, in case something goes wrong, but you don’t want to hold onto a balance that’s too high.
You might want to use your old account to pay bills or for a little emergency cash.
“You might have a hard time getting credit cards for your kids because you don [have] a bad balance,” says Mark Sauer, a certified financial planner and owner of the Sauer Wealth Management website.
“That can be a real negative.”4.
Track your expensesWhile you can’t prevent a credit score from going down, you still need to take action to make sure you’re keeping up with your credit payments.
One of the easiest ways to track your spending and credit card payments is to use Paytm.
“Paytm is a simple online platform that allows you to set limits for the amount you’re willing to pay each month and how much you’re spending each month,” says Sauer.
“It allows you an instant tracking of what you’re paying each month.”5.
Consider taking a break from your credit accountsIf you do want to take some time off from your account, you should consider it, Leaviter says.
“Credit cards aren’t cheap, so you want that extra cushion to get you through the hard times.”
For example, you could consider reducing your credit limit by using a balance-based payment plan, which lets you pay your bills off in monthly installments.
“I think that’s one of the best options,” Leavitus says.
There are plenty of other ways to reduce your credit risk, including taking out a down payment on a home or car, taking out loans with low interest rates, and even borrowing money from family members.