Student loans can positively or negatively impact your credit. Paying loans on time helps build a positive payment history and credit mix, while late or missed payments hurt your score. Defaulting on loans causes major damage and remains on your report for 7 years. Deferment and forbearance do not directly affect your score as long as payments resume on schedule. It is important to pay loans on time or seek debt relief assistance to avoid harming your credit health.

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 October 31, 2017  admin
How Student Loans Are A ecting Your Credit
You’ve nished with school and are currently employed. However, your student loans are
eating up all of your income every time you get paid. Worse, you might be even going into
debt just to pay regular bills. Sounds like the typical life of a Millennial, right? Not so fast...
Being constantly strapped for cash is no way to live. You need to have extra income in case
of an emergency. In addition, you'll nd it very di cult to reaching your savings goals, buy a
home, or whatever other plans you have for your life if you don't have access to enough
money.
If you’re struggling to pay your student loans, but you still haven’t done anything about
them, it’s time to nd a solution. Here is what you should know about how student loans are
a ecting your credit and why you should be concerned.
Positive E ects of Student Loans on Your Credit
Happy to Help!

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It's easy to feel bad about student loan debt given the fact the payments are often a
signi cant portion of your monthly budget and the interest just continues to pile on month
after month. However, student loans aren't all bad, they can actually bene t your credit
score in several ways.
Paying on Time Bene ts Your Credit Score
Your payment history accounts for a signi cant portion of your credit score. Unlike other
types of payments, such as rent or car insurance payments, all payments on student
loans are reported to the credit card bureaus, including on-time payments. As a result,
paying your student loans on time helps you to establish a payment history. A good
payment history will increase your credit score over time.
Having Student Loans Makes It Easier for You to Build a

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Credit Mix
If you want a top credit score, you should work to establish a good credit mix. Student
loans can help to build a diverse credit mix by providing an additional loan type. The loan
types that add to your credit mix include the following:
Installment loans (auto loans, student loans, etc)
Mortgage loans
Credit cards (bank and retail cards)
If you don't have a credit card or an auto loan in your name yet, paying your student
loans on time will help you to start establishing a good credit mix.
Student Loans Help You Develop a Long Credit History

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The length of your credit history is another important factor in determining your credit
score. Given that student loans generally are 20-year payment plans, having a student
loan that you consistently pay on time month after month will help you to build up a
strong credit history.
Of course, if you have the option to pay o your student loan at a faster rate, then you
should make sure to take advantage of it. There is no reason to remain in debt if you
don't have to.
Negative E ects of Student Loans on Your Credit
Now that we’ve discussed all of the positive ways that a student loan can impact your
credit, here are some of the problems that can arise from student loan debt.

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Paying Late Will Lower Your Credit Score
At the three major credit bureaus, Experian, TransUnion and Equifax, student loans are
generally treated as installment plans, which means that making payments in full and on
time each month is extremely important. The credit bureaus update their records
continuously on a 30-day basis so any missed or late payments will appear on your credit
report almost immediately after you fail to make the payment.
Even if your credit history has been stellar up to this point, it only takes a 30-days past
due report resulting from a late payment to cause your credit score to change. Whether
you were late because you couldn't a ord to make the payment or you just simply
forgot, the credit score algorithm doesn't distinguish between the reasons for the missed
payment and the result is the same: a lower credit score.
Defaulting Can Cause Major Damage to Your Credit
Score

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Defaulting on your student loan doesn't always means that someone is purposeful
choosing not to repay their loans. In fact, if you have more than one student loan or you
move to another state or country, it can become di cult to keep track of everything.
Regardless of the circumstances that landed you in default, the faster you get out the
better. When you default on your student loan, the negative payment history will
continue to show up on your credit report for up to seven years even if you pay o the
loan in full. Your credit score will be lowered as well until the credit bureaus have
decided that the information about your default is too old to report.
When you default on a student loan, it may take you years to re-establish a good credit
record. As a result, you'll continue to get denied for a mortgage, credit cards or any other
loans that you apply for thanks to a student loan default that might have happened years
ago.
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Can Deferment Hurt My Credit?

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Even with our best intentions, sometimes we can't control the nancial setbacks that life
deals us. If you are having trouble with keeping up with your student loan payments, you
may have considered a deferment so that you'll have a bit of extra breathing room every
month. Deferment allows you to temporarily suspend your minimum monthly payment
obligations on your loan.
That said, does a deferment hurt your credit? It will not. Although student loan deferment is
noted in your credit reports, it won't have an e ect on your overall credit score. However,
what matters more is that you make repayments on-time prior to deferment approval. If you
are late or miss a payment, it will impact your credit score negatively.
Keep in mind that you must keep making payments until you have received a written
noti cation that your request has been approved. If you stop making payments and your
request is subsequently denied, you will be delinquent on your loan and may subsequently
default.
How Does Forbearance A ect My Credit?
Although forbearance won’t a ect your credit, just like deferment, forbearance generally
means that you will have to continue making payments on your student loans even though
the payment amounts are temporarily reduced.
Whether you have been approved for discretionary forbearance or your circumstances are
such that mandatory forbearance applies, you still need to make sure that you are paying
the right amounts on time every month to avoid delinquency or defaulting on your student
loan.
Get Student Loan Debt Relief Now
Student loans suck so why not ght for your nancial freedom? If you’re having trouble
paying your student loans, you should get help now if you want to save your credit score.
Contacting your loan servicer is the rst step but there may be other options available to
you, as well. There are federal loan forgiveness programs available to help you lower or
eliminate your payments. Call us now to drop your student loans today.

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