How Do My Student Loans Affect My Credit?
If you have attended college in the past couple of decades chances are you have some kind of student loan debt. Some people walk away with only a few thousand dollars of debt while others graduate with hundreds of thousands of dollars of debt. Regardless of the total amount you owe, how do student loans affect your credit going forward?
You may think that having student loan debt is automatically a bad thing for your credit but it’s not as bad as you think. Student loan debt is seen, for the most part, as just another kind of debt one can have and doesn’t automatically hurt your credit. While repaying student loans can be a huge burden that lasts for decades, it doesn’t mean you will have a bad credit score because of the debt.
How Student Loans Are Treated
Student loan debt is something called an installment loan, which is similar to that of a car loan or a mortgage. It is simply a loan of a set amount that will be paid through fixed payments over a long period of time. Public and private loans are seen, in this case, as exactly the same.
Student loans are not necessarily a bad thing for your credit! You can have a lot of student debt and still have a great credit score just like how you can have a great credit score while paying off a mortgage. For installment loans the balance has little to no impact on your credit score - it's the payments that carry the most weight.
How To Keep It From Affecting Your Credit Score
The most important thing when dealing with student loans is making your payments on-time. Like every other kind of loan or credit you have to make sure you are making your payments in full and on time to avoid a ding on your credit.
Student loans can go from not affecting your score to tanking it very quickly if payments are missed. If you can’t make your payments for whatever reason you need to quickly contact your lender and see if there is some kind of freeze or grace period that you could take advantage of.
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