You’ve got your acceptance letter. You’ve registered for classes. The last item of business is finding the perfect student loan to cover your remaining college costs. Should be straightforward since you can’t imagine anyone taking advantage of America’s eager young minds, right?

WRONG!

Unlike car loans or home loans, comparison shopping for student loans can actually damage your credit score, resulting in higher interest rates!

It sounds totally backwards, but the student loan industry hasn’t quite caught up with the rest of the money lending world. So while shopping around for the best student loan out there seems like the responsible thing to do, there are some important guidelines to follow to make sure your credit doesn’t take a huge hit.

1. Be Selective–Don’t ask just anyone for a loaner. Start with your school’s recommended lender(s), and negotiate the best deal you can. If you decide to get quotes beyond that, don’t take your business to more than 3 or 4 lenders.

2. Stick with big banks–Smaller lending institutions seem to take a greater hit when it comes to student loans, so limit your dealings to bigger banks with good reputations.

3. Do it Fast–Limit your shopping timeframe to two weeks max. Your credit score may take a slight hit (5-10 points) just for shopping around, but the longer you shop the more damage is likely to be done.

For financial aid advice, check out my favorite website on the subject: FinAid.

And read The New York Times article “Danger Lurks When Shopping for Student Loans” for more information on the subject.

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