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  • Writer's pictureSubhan Tariq, Esq

Do Student Loans Affect Credit Scores?

Are you wondering whether your student loans have a negative impact on your credit? Student loans do in fact impact your credit score. Student loans are like all other loans that you have borrowed. You are obligated to pay it back and when you miss the payment, it will affect your credit score. For those who are in debt, this may be even more stressful to learn, as student loans will only further detrimentally impact your already low credit score.

To provide a little ease, it is important to note that student loans have long repayment periods set by creditors. The good news is that if you pay your student loans on time, it can actually raise your credit score. Over the course of your lengthy credit history, your credit score will receive a boost. As you pay in full and on time for a long period, those payments add up and can help build your credit. You will start to see a positive impact on your score. However, if you don’t keep your student loan account in good standing and tend to skip payments, this is when your credit score may face a decline. Avoid defaulting on your loans, missing payments, or making payments late as this can seriously devastate your credit score.

Make sure you pay at least the minimum on your card each month. It's important that you manage your budget and are able to pay on time. If necessary, you can also communicate with your lender about lowering or pausing your monthly student loan payments. You might be offered an income-driven repayment plan if you have borrowed federal loans. If you have private loans, you might be offered a modified payment plan. With a payment plan, you may be able to enroll in deferment or forbearance to temporarily pause your monthly payments.

Although a bad credit score makes it very difficult to borrow loans from lenders, it will not keep you from getting the loan you need to further pursue your studies. Federally funded student loans are offered to all students regardless of whether a student's credit score is good or bad.

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