Hi, I have a beginner's question on student loans. For my undergraduate education, my parents were generous enough to pay, but the agreement was that they would stop paying once I hit graduate school. I qualified for a loan for this semester (fall 05), but turned it down, opting rather to pay cash.

But now it is in my interest to build a good credit score, and therefore, I was thinking about re-accepting my loan for Spring 06 (this is allowed - I checked with my university). Anyhow, I want to get something positive on my credit history. First of all, do most loan providers report to the credit agencies? I'd probably be going with Bank of America, since I have a checking account there.

Second, what sort of activity could I do, to have it promptly reported on my credit report. I have a subsidized loan (no interest), so it technically doesn't make pure financial sense to pay anything back before the date when interest begins (it would make financial sense to put all my potential payments in an interest bearing account, thus get the subsidy part of my loan in cash). But I actually don't care about the financial advantages - I'd rather build my credit score.

Would it be advantagous to pay off, say, 1/6th of the debt each month for 6 months? Would such a thing show up as positive on my credit report?

How much would it be good to borrow? The full amount of tuition? Less? Note: this is all from the viewpoint of building good credit. I will absolutely pay off every dollar on time.

Any advice would be great.

Thanks,
-Michael

Michael, student loans generally begin reporting within 30 days. It will appear as ex: $18,500 borrowed w/balance of $9250 (if you take the full amt in 2 disbursements for fall/spring). You can be awarded if you are enrolled in your grad program at least half time.

If you take only the subsidized portion of your loan (up to $8500), you will not have interest accruing during the time you are enrolled in school at least half time, even if you don't borrow again in your second year. Generally sl's report as "sl, not yet in repayment". It's much cheaper than putting your balance on a credit card.

It will add a positive trade line if you manage it properly, but it's also my experience that it adds little to your credit score.

Installment loans don't give you a big jump in credit score, sorry.