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- A student loan is reported as an installment loan on your credit report and can affect your credit score.
- Late student loan payments are reported as delinquent after 30 days for private loans and 90 days for federal loans.
- If you can't afford student loan payments, consider a new payment plan, deferment, or refinancing.
A good credit score is necessary to qualify for a loan, a credit card, and even to rent an apartment. Your student loans can help or hurt your credit score based on your payment history.
If you struggle to make on-time payments, loan servicers or lenders offer customizable repayment and forgiveness programs as a solution. And by consistently paying your bill, your credit score will improve.
Do student loans affect credit scores?
A student loan will appear on your credit report as an installment loan and affect your credit score as any other installment loan would.
As you pay off your student loan, those payments are reported to the credit bureaus. This can help you build credit, as payment history makes up 35% of your FICO credit score and 40% of your VantageScore credit score. On the other hand, missed payments will cause your credit score to drop. The loan amount and age of your student loans will also impact your credit score.
Both private and federal student loan servicers report your payment activity to the credit bureaus. However, unlike private loan lenders, federal loan servicers tend to be more forgiving when reporting missed payments.
Private student loans: Private loan providers will report a missed payment to the credit bureaus as a delinquency after it's more than 30 days late. After 90 days of missed payments, your student loans may go into default.
Federal student loans: In contrast, federal student loan servicers will report missed payments at least 90 days late. Federal student loans don't go into default until they're 270 days late.
How to build credit with your student loan
Practicing good student loan management can positively affect your credit score.
- Make timely payments — Put your loan on autopay or set monthly reminders to ensure you don't miss a payment.
- Monitor your credit report — Regularly checking your credit report helps you spot inaccuracies and stay on top of your credit. Disputing those errors can keep your credit intact. You can find our guide on the best credit monitoring services here.
- Diversify your credit file — Applying for a credit card and practicing good payment habits allow you to maintain a credit mix and improve your credit score.
If you're facing financial hardship, making your student loan payments on time can be challenging. Luckily, you can take advantage of various programs and strategies to make your student loan bill more manageable.
What if you can't pay your student loans?
If you're struggling to pay your federal student loans, you have several options before you miss a payment:
- Changing your repayment plan — Lower your monthly payments through a graduated or income-driven repayment plan.
- Applying for deferment or forbearance — Pause or temporarily reduce your student loan payments.
- Applying for student loan forgiveness — Get rid of your payments entirely by meeting loan forgiveness eligibility requirements.
Some private lenders also offer deferments and forbearances, but options vary between lenders.
Consolidate or refinance federal student loans
You can apply for student loan consolidation if you need help managing multiple federal student loans. The Direct Consolidation Loan combines your federal student loans into one loan. Consolidating your debt means you only need to pay one bill each month. Additionally, it may lower your monthly payments and help you qualify for certain forgiveness programs.
However, consider the pros and cons of refinancing student loans. Consolidation may increase your loan's repayment period and interest rate. You may also lose out on borrower benefits like interest rate discounts or cancellation benefits.
Refinance your private student loans
Refinancing your private student loans can also lower your monthly payments. You'll want to compare student loan refinance lenders for the lowest rates and the best terms.
You must have a good credit score to qualify for refinance loans with favorable terms. If your credit score is less than perfect, a co-signer with a good credit score can help you secure a refinance loan.You can find our guide on the best student loan refinance companies here.
If you're thinking about skipping out on your student loan payments, think again. An unpaid student loan can significantly damage your credit score or worse.
How student loans affect credit scores frequently asked questions
How much do student loans affect credit scores?
Your student loan will affect your credit score like any other type of credit line. Your payment history will impact your credit score the most. If you miss a payment by 30 or 90 days, your servicer or lender will report it to the credit bureaus, hurting your credit score. If your loan continues to go unpaid, it may end up in collections, causing your score to drop even more.
Why did my student loan drop my credit score?
Your credit score likely dropped because of a delinquent on your credit report. If you've missed a student loan payment by 30 to 90 days, your servicer or lender will report the overdue bill to the credit bureaus. The missed payment shows up as a negative mark on your credit report, lowering your credit score.
Does FAFSA affect credit scores?
FASFA is an application for federal student aid. Applying for student aid won't impact your credit score.