Paying student loans on time has positive effects on your credit by establishing a payment history and credit mix. However, late or missed payments, as well as defaulting, can significantly lower your credit score. While deferment and forbearance do not directly impact your score, you must still make on-time payments during these periods to avoid any negative consequences. Getting help through loan forgiveness programs can save your credit if you are struggling with student debt repayments.

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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 Credit Mix

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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.
Paying Late Will Lower Your Credit Score

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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
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

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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?
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.

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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.