Kudos has partnered with CardRatings and Red Ventures for our coverage of credit card products. Kudos, CardRatings, and Red Ventures may receive a commission from card issuers. Kudos may receive commission from card issuers. Some of the card offers that appear on Kudos are from advertisers and may impact how and where card products appear on the site. Kudos tries to include as many card companies and offers as we are aware of, including offers from issuers that don't pay us, but we may not cover all card companies or all available card offers. You don't have to use our links, but we're grateful when you do!
Does Student Loan Debt Affect Your Credit Score?
July 1, 2025
Quick Answers
Yes, student loans appear on your credit report and can initially cause a minor dip in your score due to a hard inquiry and increased debt.
Consistent, on-time payments build a positive payment history, a key factor that can significantly improve your credit score over time.
Conversely, missed payments or defaulting on your student loans will negatively affect your payment history and can cause substantial damage to your credit standing.
What Is a Student Loan Debt?
Student loan debt is money borrowed from the government or a private lender to pay for higher education expenses. This borrowed amount, known as the principal, must be paid back over time with added interest. These loans are specifically designed to cover costs like tuition, fees, books, and living expenses while a student is enrolled in a degree-granting program.
Like a mortgage or auto loan, a student loan is a type of installment debt that contributes to your overall credit profile. Making consistent, on-time payments can demonstrate financial responsibility and help build a positive credit history. Consequently, your payment behavior on these loans is reported to credit bureaus, directly influencing your credit score.
How Student Loan Debt Can Impact Your Credit Score
Student loans are a major financial commitment that can significantly influence your credit score. Understanding this relationship is key to managing your debt and maintaining a healthy financial future.
- Initial Inquiry and New Account: When you first take out a student loan, it appears as a new installment account on your credit report. This can cause a minor, temporary dip in your score due to the hard inquiry and a lower average age of your credit accounts.
- Building Payment History: Consistently making on-time payments is the most crucial step. This positive payment history demonstrates reliability to lenders and is the single biggest factor in building a strong credit score over time.
- Improving Credit Mix: Student loans are a type of installment loan. Having one can diversify your credit mix, which also includes revolving credit like credit cards. A healthy mix can positively influence your score.
- The Impact of Late Payments: Missing a payment by 30 days or more will likely be reported to credit bureaus. This delinquency can significantly lower your credit score and remains on your report for seven years.
- Loan Default: If payments are missed for an extended period, typically 270 days for federal loans, the loan goes into default. This has a severe, long-term negative impact on your credit, making future borrowing very difficult.
How Much Will Student Loan Debt Affect Your Credit Score?
The impact of student loans on your credit score depends on several factors. Here are the key elements that determine how your educational debt influences your credit standing.
- Payment History: This is the most significant factor in your credit score. Consistently making on-time payments builds a positive history, while late or missed payments can cause significant damage to your score.
- Credit Mix: Lenders like to see a variety of credit types. As an installment loan, a student loan can diversify your credit profile and may improve your score over time.
- Length of Credit History: Student loans often have long repayment terms, which can increase the average age of your accounts. A longer credit history is generally favorable for your credit score.
How You Can Avoid Student Loan Debt Affecting Your Credit Score
Make On-Time Payments
Consistently paying your student loan bill on time is the most effective way to build a positive payment history. This demonstrates financial responsibility to lenders and is a major factor in calculating your credit score, helping to improve it over the long term.
Explore Repayment Plans
If you struggle with payments, investigate alternative repayment plans. Options like income-driven repayment can lower your monthly bill, making it more manageable. This proactive step helps you avoid missed payments that would otherwise damage your credit score and lead to financial stress.
Communicate With Your Servicer
If you anticipate financial hardship, contact your loan servicer immediately. They can explain options like deferment or forbearance, which provide temporary relief and prevent negative reporting to credit bureaus. Proactive communication is key to protecting your financial standing and avoiding default.
Choose the Right Card to Student Loan Debt
No matter your starting point, your credit score isn't set in stone; it's a dynamic number that can always be improved with consistent, positive financial habits. Meaningful changes can often be seen within just a few months of dedicated effort.
- Establish automatic payments. Your payment history is the most significant factor in your score, so setting up automatic payments or reminders is crucial to ensure you never miss a due date.
- Reduce your credit utilization. Aim to keep your credit utilization ratio below 30% by paying down balances or requesting a credit limit increase from your provider.
- Monitor your credit reports. Regularly check your reports from Experian, TransUnion, and Equifax for free at AnnualCreditReport.com to identify and dispute any errors.
- Become an authorized user. Being added to an account with a strong payment history and low utilization can help boost your score, provided the account reports to all three credit bureaus.
- Diversify your credit mix. Lenders like to see that you can responsibly manage different types of credit, such as credit cards, installment loans, and mortgages.
- Limit hard inquiries. Avoid applying for too much new credit at once, as multiple hard inquiries in a short period can temporarily lower your score.
The Bottom Line
Student loan debt can impact your credit score. Making timely payments helps build your credit history, while missed payments can have a negative effect on your overall score.
Frequently Asked Questions
What happens if I miss a student loan payment?
Missing a payment can result in late fees. If the payment is over 30 days late, it will be reported to credit bureaus, negatively impacting your score.
Can consolidating my student loans affect my credit?
Yes, consolidation can cause a temporary dip in your score from a hard inquiry, but it can simplify payments and potentially improve your score over time.
Do student loans in deferment or forbearance affect my credit?
No, as long as your loans are officially in deferment or forbearance, they are considered current and will not negatively impact your credit score.
Supercharge Your Credit Cards
Experience smarter spending with Kudos and unlock more from your credit cards. Earn $20.00 when you sign up for Kudos with "GET20" and make an eligible Kudos Boost purchase.
Editorial Disclosure: Opinions expressed here are those of Kudos alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.
