Dear Debt Adviser: More than five years ago, I became delinquent on my student loan. I was able to set up a repayment plan that I pay every month, and I have a balance of $ 6,700 as of today. Since I have been delinquent, my credit score has been low for these five years.
I don’t foresee my credit score improving until the balance is paid off. I do not have any other debt except my car loan. Would it be a bad idea to get a loan from my 401(k) to pay the balance? I want my credit score to change because I want to buy a house. I can’t wait another five years, until I pay the balance on my school loan, to buy a house. — Joyce
Dear Joyce: It would be a really bad idea to take the money from your 401(k) to pay off your student loan.
Let me count the ways. First, you’ll lose any investment gains or compounding interest on the amount borrowed, which you can never make up. Second, if you get laid off or leave your employer for a great opportunity elsewhere, the loan on your 401(k) would come due immediately. That means you must replace the money right away or, unless you are 55 or older, pay taxes on the amount you took out plus a 10 percent penalty for the privilege of an early withdrawal. So, the $ 6,700 you borrowed will wind up costing you about $ 9,000. Third, paying the balance of your school loan won’t improve your c…………… continues on San Jose Mercury News
March 5 - Overview
-- Toledo, Ohio-based auto supplier Dana Holding Corp.'s credit measures
have improved steadily over the past two years, and we believe this
improvement is sustainable at current levels of auto sales.
-- We are raising our corporate credit rating on Dana to 'BB' from 'BB-'.
We are also raising our issue ratings on Dana's asset-backed loan (ABL)
revolving facility to 'BBB-' from 'BB+' and on its $ 750 million senior
unsecured notes to 'BB' from 'BB-'.
-- Our rating outlook is stable, reflecting our assumption that the
company's financial policy will continue to favor relatively low leverage and
cash flow generation and that economic weakness in Europe will be not lead to
significant losses or cash use.
On March 5, 2012, Standard & Poor's Ratings Services raised its corporate
credit rating on Toledo, Ohio-based auto supplier Dana Holding Corp. to
'BB' from 'BB-'. The outlook is stable. We also raised our issue-level ratings
on Dana's asset-backed loan (ABL) revolving facility to 'BBB-' from 'BB+', on
its $ 400 million senior unsecured notes due in 2019, two notches above the
corpora............... continues on TEXT-S&P raises Dana Holding corp credit rating to 'BB' - Reuters