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Student loans — no rush?

Question: In a recent column, you said that there's no rush to pay off student loans because interest rates are so low. But if I have $20,000 in student-loan debt, will it count against me if I apply for a mortgage?

Answer: Not necessarily. When lenders evaluate you, they look at the entire picture — how much you owe on loans, credit cards and any other kind of debt. They also look at your income and, in the case of a mortgage, the cost of the house you want to buy.

If student loans are your only debt, you may have no problem getting a mortgage. On the other hand, if you also have significant credit card debt, or have made some late payments, your chances of getting a loan aren't as good.

If you're thinking of applying for a mortgage, start by getting a copy of your credit score. For $12.95 you can get your FICO score, the industry standard, plus a report from one of the three major credit bureaus at The information will tell you why your score is high or low and what you can do to improve it, if necessary.

The median FICO score is 725, says Craig Watts of Fair Isaac, the company that compiles the scores.

There's no secret about how to improve your score: Pay all your bills on time; keep balances on revolving accounts — such as credit cards — to below 50 percent of your credit limit; and don't have too many accounts.

If you need to reduce your debt, tackle the most expensive debt first. That usually means credit cards. If your only debt is student loans, consolidate them at the current low interest rates.

Have a question about kids and finances for Dr. Tightwad? Write to Dr. T at 1729 H St., N.W., Washington, D.C. 20006. Or send the good doctor an e-mail message (and any other questions for this column) to