Skip to Content Top

Do Student Loans Affect Your Credit Score?


With recent studies showing that college students graduate with an average of $33,000 in debt, it is normal to be concerned about the financial implications of your student loans. However, if handled correctly and responsibly, your student debt can serve as a major asset to help build your credit history and credit score. In fact, responsible borrowing can help you qualify for your first apartment or car loan. In this blog, we explain a few ways that student debt can affect your credit score.

Make Your Payments on Time

Making your student loan payments on time can boost your credit score. Student loans are usually treated like installment plans, so if you pay on time every month, credit bureaus will take note. This shows other lenders that you can be trusted with money.

You should avoid defaulting on your loans for as long as possible. Defaulted loans carry heavy repercussions that can damage your credit history. This can significantly impede your prospects when you get started looking for employment or home ownership. In most states, employers can check an applicant’s credit report before offering them a job.

If you are unable to make your monthly student loan payments, you should contact your lenders and ask for a deferment. However, if you default on your loan, you might lose your right to a deferred payment plan option. Defaulted loans can also affect your eligibility for future financial aid.

Does Deferment Hurt My Credit Score?

The short answer is no. As you may be aware of, most recent graduates barely have enough money to make rent, let alone pay back their student debt. Although deferment isn’t an ideal option, it won’t hurt your credit score. Some financial institutions might even take your deferment into account when deciding on another loan request. However, your credit score benefits most from regular, on-time repayments.

Do you have more questions about student loans and their impact on your credit score? Contact our Chicago team of consumer attorneys, or call (312) 313-1613 for more information.