Does Student Loan Affect Credit Score?

Does Student Loan Affect Credit Score

Are you looking answer for Does Student Loan Affect Credit Score? then you are the right place. In the current job market, possessing the right qualifications is of paramount importance. Education is the bedrock of society, and it can transform how you’re treated and valued. But education comes with a hefty price tag. So, here’s the big question Does Student Loan Affect Credit Score?

The students need to go through multiple levels of education. These include elementary school, middle school, high school, college, and many more. It takes thousands of dollars to bear all the educational expenses until you get the required qualification. 

On average, it takes around $20000 every year and if you spend 15 years in education then all you need to spend is around $300,000, which is a significant amount. The students who belong to a good financial family can afford the education and pursue their studies easily. 

However, those who lack funds and belong to the family with lower financial status need to suffer and face difficulties in paying their fees. For a solution, they need to look for scholarships and educational loans. 

Education loans are the best alternative for lower-income students. It allows students to obtain the necessary funds to cover their educational expenses. Banks and other financial solution providers offer these types of loans with less interest or zero interest. 

However, it’s essential to consider the financial implications as well, such as how student loans can impact your credit score. So, does student loan affect credit scores?

What is a Student Loan?

Students who are facing a lack of funds and looking for a financial solution to pay their fees and bear other educational expenses, look for education loans also known as student loans

The student loans are specially made for low-income students who want to pursue their education but lack funds. Hundreds of banks, reserves, and programs allow the students to roam at reasonable interest or zero interest. 

There are various terms and conditions which are associated with student loans which make it easy for students to repay them in the future. 

After taking the loan are repaid in installments with a flexible tenure. Also, while studying there is no need to take any burden of repaying as the installments will start only when you get employment. The amount of installments is determined by the salary you are offered or your total monthly income. It will be around 20% to 30% of the salary you received. 

However, most of the students are worried whether the student loan affects their credit score or not.

Here this article aids you with the most accurate answer to the query, “Does student loan affect credit score?

List of Reasons How Does Student Loan Affect Credit Score?

1. Student Loan and Your Credit Score 

The student loans are taken on behalf of the credit score only if you turn 18 years of age. Whereas in case of the school students, the student loan is released on behalf of the credit score of your parents or your guardian. 

So, make sure to maintain a good credit score to easily get the student loan without any delay or rejection. Several things can be done to maintain a good credit score, these include paying the bills on time, having a clear record in all the places, paying all the pending dues of all places, and many more. 

A single missed installment of any loan or bill also affects your credit score negatively. And it takes around seven years for the credit to return to a healthy score. In the case of school students make sure that your parents have maintained a healthy credit score whereas if you are above 18 then keep in mind to maintain the credit score by repaying all the bulls and duos on time. 

If you have taken a student loan after 18 years on behalf of your credit score then make sure to repay all the installments as per the payback schedule and terms of your loan. 

So, it is clear that the student loan is directly associated with the credit score and any fluctuation in the repayment schedule will cause an impact to the credit score. 

2. When Payment Is Delayed or Missed

The repayment schedule is made as per the terms and conditions of the student loan lender. The federal student loan program has flexible terms and conditions as compared to the loan terms of any private lender. That is why it is highly recommended for students to apply for the federal or state government student loan program to get the funds to cover their educational expenses. 

Here, you can enjoy the flexible schedules of repayment. In case you have missed any of the repayments, it can affect your credit score if your lender has complained about the late repayment. 

Also, there is a tenure which determines the minimum time granted to the students for the repayment of the loan installments. In the case of federal student loans, the student needs to wait at least 90 days to report all the late repayments. 

Whereas in the case of private student loans, the time for reporting is 30 days. In case you have not paid the repayment the lender will report after 30 days and this will negatively affect your credit score. 

The only thing lenders can do before the completion of report tenure is the penalty for late repayment fees. How much the penalty for late repayment fees depends upon the terms and conditions of the loan agreement. Note that a late repayment report will stay on your credit score portfolio for seven years and negatively affect your credit. More overdue repayments will lead to more damage to your credit score. And if you are unable to pay within 270 days, you will be marked as default. 

3. If you cannot pay your student loans

Sometimes due to the personal recession and other lower financial situations, you might not be able to pay the student loan which will affect your credit score. In such a situation there is a method that can prevent your credit score from collapsing. Here, you have to formally request your lender to lower or pause your monthly student loan payments. There are some ways to legally perform these actions. These are: 

  1. Enrol yourself in the deferment or forbearance which will pause the repayment schedule for a specific period. 
  2. In the case of a federal student loan, you can sign up for the income driven repayment plan to get a more flexible repayment schedule. 
  3. You can also apply for the income-driven repayment plan to modify your repayment schedule and pause it for a specific period. 

Here, if you have performed any of the actions mentioned above then this will not cause any impact on your credit score. 

Does paying student loans build credit?

Most students have a common query, “Does student loan affect credit score”. Here the student wants to know whether repaying the student loan can improve their credit scores and make them eligible to enjoy the benefits of high credits or not. Well! Repaying the student loan as per the repayment schedule is one of the best ways to improve the credit score. 

If you are making the repayment of your student loan on time then congratulations on your high credit score. 

For students who have only a single type of credit you are using this may be a credit card that the student loan can be a great way of creating a credit mix and improve the score. But it is not worth taking a higher loan to increase your credit score which you can not pay. 

This will make your credit score poorer. Also, in the case of the minor students, the student loan can be taken by the parents. This will affect the credit score of your parents. 

On the other hand, if the loan is taken in a co-signed manner by the students along with their parents then it will appear on the credit score portfolio of both of your parents and also affect the credit score of you and your parents. 

How does refinancing student loans affect my credit? 

In case you just refinance your loan then the lender will offer you a fresh student loan and will repay your dues too. The new student loan comes with several features and advantages. It is offered with a lower interest rate, a more flexible repayment schedule, and many more. 

But to refinance the loan there is a need for a solid credit score which is usually absent in the case of students. 

However, if the student loan is co-signed along with your parents or guardian then the refinancing can be possible with the high credit score of your parents or guardians. 

However, there are several downfalls of refinancing the loans that come along with the benefits. You are not able to enjoy the benefits that come with the federal loan, which are income-driven repayment, loan forgiveness, forbearance, or deferment. Also, the path of refinancing in one way. One, you have switched from a federal loan to private lenders you are unable to come back towards the federal loan. 


1. How much does a student loan affect your credit score?

Student loans have a significant influence on your credit score. The student loan is considered in the category of installment credit and the allover status of the loan will be added to your credit mix. The student loan affects the 10% of your credit calculation.

If you are paying the student loan on time then it will be beneficial for your credit score and give it a boom to reach high potential and open various loan products for you. 

2. Will student loans be removed from credit reports?

Yes, the student loan can be removed from your credit report and your default status will be eliminated only if the loan amount is rehabilitated. There is a particular time allotted for you to repay the main if you went too late for it, you will be marked as a default in your credit report.

The average time of default status is around 270 days. If you fail to repay within 270 days, you will be marked as default. 

3. How much time is granted for student loan repayment?

The repayment time in the case of student loans is higher as compared to traditional loans. In the federal student loan program the time of 90 days will be given to the students to repay the main if the repayment date exceeds due to any reason. 

On the other hand, the time of 30 days is given to the student if the loan is taken from a private lender. After the time exceeds the lender can file a complaint report and this will affect the credit score of the student. And in case the 270 days exceeds the student will be marked default and can not take any government or nongovernment services. 

4. Are student loans for a lifetime?

Student loans come with greater tenures and lower interest rates as compared to traditional loans but the student is not for a lifetime. The average tenure of a student loan lies between 10 to 25 years.

Also, the students are not forced to repay the loan before the completion of their education or get any employment. A certain percentage of their earning will be taken by the lender as the repayment of the loan as per the terms and conditions of the loan.


Student loans can be a good way to cover the educational expenses of your high school or college. However, the question arises: Does Student Loan Affect Credit Score? There is a need for a good credit score to get the required financial assurance from federal student loan programs or private lenders. In case you have taken a student loan, then make sure to repay the main as per the repayment schedule.

The delay can affect the credit score negatively and the long delay leads to the default. If you are a minor then the loan can be taken by your parents or guardian based on their credit score and in the case of an adult, you can take a loan co-signed along with your parents.

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