Seeking Best Student Loan Deal Kills Your Credit Rating: NYTimes

If Obama and the Dems somehow manage to blow the November election,

it won't be for lack of issues the BCRHB clique has provided them over the last 8 years of living hell in America ... ;-) ...

The latest episode in the on-going student loan debacle -- a result of the privatization mania in which the Dems, of course, eagerly participated --

is that it turns out shopping for a good deal there, as you would looking for a mortgage or car loan, can destroy the credit rating of a young person starting out in life ... or her parents ...

The short answer is because that little exercise in bargain-hunting shows up in the credit agency reporting figures like someone about to go bankrupt desperately seeking any source of credit they can before going under ...

But the long answer -- found in this scintillating and sharply written Your Money column for the [ almost hidden ] Saturday NYTimes by Ron Leiber -- unveils the truly Orwellian logic of the credit rating agencies who determine so much of American consumers' economic life ...

As we so often say, read it and weep ... ;-) ...

There is just one problem with comparison shopping for a private student loan.

Doing so may damage your credit score.

Since lenders quote higher interest rates to applicants with lower scores, some students could end up paying thousands of dollars more in interest over the life of their loans.

In few other areas of consumer life are you at risk of being penalized for seeking out the best deal.

Indeed, mortgage and auto loan seekers who comparison shop within a relatively short period of time do not see their credit scores suffer.

But Fair Isaac, the company that helps credit bureaus calculate credit scores, does not extend the same break to private student loan applicants or their parents, who often co-sign for loans.

The basic inequity here — the fact that people borrowing money for higher education are not given the same benefit of the doubt as people shopping for mansions and BMWs — is unfortunate enough.

But the real head-scratcher is how little anyone in the industry seems to know about how often students and their parents suffer damage.

[This] wouldn’t matter if Fair Isaac bowed to the will of the New York State attorney general’s office.

The office has been investigating the student loan industry for more than a year and has asked Fair Isaac to treat student loan borrowers like car and home shoppers.

So far, Fair Isaac has refused to change its policy.

This issue matters because even a small credit score decline can lead to a more costly interest rate.

Every point counts at a time of tightening credit standards, when many lenders have been requiring higher minimum credit scores.

In addition, banks have been getting stingier with another source that parents tap for tuition money, home equity loans.