advice for building credit for Medical School Loans as a pre-med

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samurai5511

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I am currently applying to medical school and have started to look at the financial side of medicine and need some advice on building credit.

Some Background info. :

My knowledge when it comes to personal finance:

My experience with managing money is very limited. I am currently an undergraduate and have had my parents pay for my school and living costs. It is a bit embarrassing but it is what it is. As a result of this lack of practical experience, I have started an online lecture series on basic personal finance and have been reading a book on finance specifically for doctors called the White Coat Investor.

My current situation when it comes to my credit and finances.

Due to my parents completely financing my expenses and schooling throughout my undergraduate studies, I don't have any student loans. But I have not built any credit by having a credit card or line of credit.

Why I think not having credit may be an issue:

From what I have read, Federal Loans for medical school do not check for credit scores but private ones do. This may be an issue for me because many of the schools I am applying to are private and have tuition rates that vary from the low 40ks. to mid 50ks. This is not including the cost of living. I will more than likely have to finance all of this cost on loans because my parents will not be able to help me past my undergraduate studies.

Ideas to build credit for general living expenses and loans ranked by desirability:

Top Options:

  1. Obtain a Secured Credit Card
  2. Pay utility bills and cell phone bills, and get these bills tied to my credit using The Experian Boost Line
Iffy Options:

3 Become an authorized user - this option does not seem desirable because I do not want to have to rely on family members to make credit card payments on time

4 Get a Line of Credit at a Retailer- I have no idea how this option would work because I did not find it on the sites I looked through talking about building credit as a beginner. If anyone could explain how this works and whether it is a good idea I would really appreciate it.

In conclusion, I am looking for advice on how to build credit and maybe even general financial advice. I am a bit apprehensive in taking on these huge loans but I have read about the several options for paying these down and think if I live frugally after medical schools and aggressively pay down the loans medical school can be a viable option from a financial and personal fulfillment point of view.

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Graduate PLUS Loans (federal) will cover up to the entire cost of attendance. This will include your living expenses.

There’s plenty of good reasons to start building credit, but the cost of medical school isn’t one of them.
 
As the above poster answered, you can finance your entire medical education (even at a private school-as I did) with federal loans.

It is certainly worthwhile to build credit regardless.

I’m not sure how retailer line of credits work. But department store/retail credit cards often adversely affect your credit score. You typically want your credit/credit cards to come directly from banks/credit unions.

Belive it or not, your students loans will actually help you build credit. Paying your own utility bills and having a credit card from a reputable source (like Wells Fargo or Chase-avoid store credit cards as I mention above) and setting it on autopay will help. ALWAYS pay your credit card off each month-I personally don’t believe credit cards are for credit. They are for convenience (and points) and very very rarely, for a rare emergency when you can’t get help from any savings/friend/family and the emergency is worth paying 15-25% interest on.

Whitecoatinvestor.com is a great resource, and the book is a great intro. MrMoneyMoustache is great for his frugal philosophy, which is really helpful (and easier) when you’re young/single.
 
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Graduate PLUS Loans (federal) will cover up to the entire cost of attendance. This will include your living expenses.

There’s plenty of good reasons to start building credit, but the cost of medical school isn’t one of them.
Sounds good, I will start anyways.
 
As the above poster answered, you can finance your entire medical education (even at a private school-as I did) with federal loans.

It is certainly worthwhile to build credit regardless.

I’m not sure how retailer line of credits work. But department store/retail credit cards often adversely affect your credit score. You typically want your credit/credit cards to come directly from banks/credit unions.

Belive it or not, your students loans will actually help you build credit. Paying your own utility bills and having a credit card from a reputable source (like Wells Fargo or Chase-avoid store credit cards as I mention above) and setting it on autopay will help. ALWAYS pay your credit card off each month-I personally don’t believe credit cards are for credit. They are for convenience (and points) and very very rarely, for a rare emergency when you can’t get help from any savings/friend/family and the emergency is worth paying 15-25% interest on.

Whitecoatinvestor.com is a great resource, and the book is a great intro. MrMoneyMoustache is great for his frugal philosophy, which is really helpful (and easier) when you’re young/single.
Sounds good. Thank you for the advice. I am planning on slowly reading the books mentioned in the white coat investor book.
 
BTW OP, being an authorized user doesn't really affect your credit at all. Just get one or two big-name no-fee credit cards so that you have some credit limit and length of credit 8 years from now when you finish residency and look to refinance those med school loans.

Belive it or not, your students loans will actually help you build credit.
Do you know if refinancing ends up lowering credit by deactivating older accounts? One of the biggest things affecting my credit score right now is age of credit (I thought I was being smart by closing my credit cards and only having a debit card until about 5 years ago.... was not smart)
 
BTW OP, being an authorized user doesn't really affect your credit at all. Just get one or two big-name no-fee credit cards so that you have some credit limit and length of credit 8 years from now when you finish residency and look to refinance those med school loans.


Do you know if refinancing ends up lowering credit by deactivating older accounts? One of the biggest things affecting my credit score right now is age of credit (I thought I was being smart by closing my credit cards and only having a debit card until about 5 years ago.... was not smart)

Unfortunately I don't know. Dr. Google suggests refinancing temporarily hurts your credit. But I wouldn't worry about it--if refinancing is the smart financial choice, you should still go forward with it.
 
Unfortunately I don't know. Dr. Google suggests refinancing temporarily hurts your credit. But I wouldn't worry about it--if refinancing is the smart financial choice, you should still go forward with it.
Thanks. I was thinking about doing it in two stages -- refinancing my private/institutional loan now and then my federal loans whenever they start accruing interest again (3? 6? months). Not sure if the private loan refinance would drop my score enough to hurt the federal loan refinancing. Probably not, actually.
 
Thanks. I was thinking about doing it in two stages -- refinancing my private/institutional loan now and then my federal loans whenever they start accruing interest again (3? 6? months). Not sure if the private loan refinance would drop my score enough to hurt the federal loan refinancing. Probably not, actually.

There'd be an extra hard credit pull. Whether it affects things enough to impact a second application to refinance I don't know.

When federal loans start accruing interest again is anyone's guess at this point...
 
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