WEBVTT

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The White House recently announced
a sweeping plan to forgive up

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to $10,000 worth of student loan debt
for millions of Americans.

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But how will this impact
your credit score?

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Let's find out.

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The bad news is that, yes, your credit
score may, in fact, take a temporary debt

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because your student loans
contribute to your credit mix

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or your variety of loan types.

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Your score may be dinged
since it may lower the average age

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of your credit accounts.

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The good news is that
none of this should alarm you too much.

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We're really only talking about a 5
to 10 point drop.

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And so long as you continue

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making your other loan payments on time,
you should see a rebound fairly quickly.

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So while a temporary dip
may be disappointing in the short term,

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there's no reason to worry about your
chances of securing a loan down the line.

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That being said,

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if you are in the market for a new house
or car,

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we suggest
looking to get pre-approved ASAP

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so that your credit score
is as high as possible when you apply.

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Remember that

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the student loan cancelation
application doesn't open up until October,

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so any change to your credit
score will happen well after that.

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Be sure to drop a comment below
with your financial related questions

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and stay tuned to Lifehacker
for more tips and tricks on how to do

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everything better.