Do Student Loans Affect Your Credit Score?

Student loans affect your credit score in much the same way other loans do: Repaying the loan on time will strengthen your credit; paying late will hurt it. Student loans, though, may give you extra time to pay before you’re reported late.

Once you enter student loan repayment, you generally must make monthly payments until your loan is paid off. Either your federal loan servicer or private loan lender reports these payments to credit bureaus — and you begin to establish a solid track record of managing credit, which can grow your three-digit credit score over time.

You have a right to see the information the credit bureaus keep. You can check all three major bureaus’ reports for free each week, and you can check a free credit report from TransUnion through NerdWallet as often as you like. That one updates weekly.

Here’s what you need to know about student loans and your credit score.

» MORE: 8 ways to pay for college

Key factors: How student loans impact your credit score

Generally, student loans are installment loans, which means you pay a specified amount for a certain time period. Student loans can impact all five components for your credit score:

• Payment history. 

• Length of your credit history. 

• Credit mix.

• Amounts owed.

• Recent applications. 

» MORE: What factors impact your credit score?

Payment history

Payment history is the most important factor credit scoring companies like FICO and VantageScore consider when calculating credit scores. That’s why paying your student loan bill on time every month is crucial to building your credit. Your score will start to drop after your servicer or lender reports your late payment to one or all of the three major credit bureaus.

How long before it’s reported depends on the type of loan you have:

• Federal student loans. Servicers wait at least 90 days to report late payments.

• Private student loans. Lenders may report late payments after just 30 days. Contact your lender or check your loan origination documents to verify the terms of your loan. 

Servicers and lenders may also charge late fees as soon as you miss a payment.

» COMPARE: Federal vs. private student loans

If your servicer or lender does report your late payment, also known as a delinquency, it will stay on your credit report for seven years.

The more overdue your payment, the worse the damage to your credit. For instance, your federal student loan will go into student loan default if you don’t make a payment for 270 days. That will hurt your credit even more than a 30- or 90-day delinquency. Private loans generally go into default after just 90 days.

Length of your credit history

The longer your credit history, the stronger your credit score may be — because it demonstrates your ability to manage credit and debt over time. For many people, student loans are their first foray into debt repayment, helping them establish a long credit history before taking out larger loans, like mortgages.

» MORE: How length of credit history affects your credit scores

Credit mix

If you've never used credit before, or used only one type of credit (like a credit card), then having a student loan is good for your score because it helps your credit mix. But credit mix is a smaller score factor, so it's not worth taking out a loan you can't afford just to have a mix of credit types.

» MORE: How credit mix impacts your credit score

Amounts owed

Credit score calculations consider the amount of debt you owe, which includes the amount you owe on an installment loan like a student loan. Your score benefits when you pay down your student loans, and it shows lenders you can manage debt responsibly.

Recent applications

Each student loan application that requires a hard credit check could temporarily lower your credit score by a few points.

Most types of federal student loans, including all federal loans for undergraduates, don’t require a credit check. However, federal direct PLUS loans, available to parents and graduate students, do require one.

Private lenders typically require a credit check. When shopping around for private student loans, prioritize lenders that offer a soft credit check to pre-qualify, so you can compare interest rates with no impact to your credit score.

Try to avoid applying for student loans during a time when you’re also applying for other kinds of credit, like credit cards, a car loan or mortgage. Spacing out applications every six months should lessen the credit impact.

How to protect your credit score if you can’t pay your student loans

Sometimes money gets tight. In those situations, ask your lender about lowering or pausing your monthly student loan payments. You might be able to:

• Sign up for an income-driven repayment (IDR) plan if you have federal loans. You could get your monthly payments as low as $0, depending on your income.

• Apply for a modified payment plan if you have private loans and your lender offers this option.

• Enroll in deferment or forbearance to temporarily pause your monthly payments.

Changing the terms of your loan does not hurt your credit score. As long as you handle payments as agreed — even if that means paying $0 per month — your credit score shouldn’t suffer.

If you do let your credit score fall by missing student loan payments, it may become more difficult to qualify for new credit cards, mortgages, car loans, apartment rentals and even cell phone contracts.

Does paying student loans build credit?

Yes, paying your loan bills on time is the most important factor affecting your credit score. You can’t get traction without it. Making regular, on-time payments on student loans will help build credit.

Student loans taken out by parents, such as federal parent PLUS loans and private parent loans, affect only the credit of the person who took out the loan. So if a parent takes out a federal parent PLUS loan to help you pay for school, it affects their credit. On the other hand, a private student loan you took out and a parent co-signed appears on both of your credit files and can affect scores for both of you.

» READ: NerdWallet’s guide to paying for college

How refinancing student loans affects your credit score

If you apply to refinance your student loans with a private lender, the lender will perform a credit inquiry on you.

It’s smart to shop around for the lowest rate before refinancing, especially if you can do it without dinging your credit. Multiple hard credit report inquiries can temporarily shave a few points off your credit score. Either of the following options can help you avoid that:

• Apply for all the loans you’re comparing within a 14-day period. Under the FICO credit scoring model, multiple hard inquiries of the same type — such as student loan inquiries — count as a single inquiry if they happen within a short period. Various versions of the credit scoring model specify different time frames — including 14, 30 and 45 days — but you’ll be covered under all of them if you submit all your applications within 14 days.

• Get soft rate estimates through lenders’ pre-qualification processes. Some lenders let you get a “soft” rate estimate that won’t affect your credit. Prioritize these lenders when shopping around.

» MORE: Best private student loans for college

How credit scores impact your ability to borrow new student loans

All of your student loans can affect your credit. But you may not need good credit to take out a student loan in the first place.

• Federal loans. Only federal direct PLUS loans, available to parents and graduate students, require a credit check. However, your credit score won’t affect your student loan’s interest rate; all PLUS loans disbursed in the same year have the same rate.

• Private loans. Private loans typically require that at least one borrower have good credit. The lender will perform a credit check to determine whether you qualify for the loan. The higher your credit score, the lower the interest rate you’ll likely receive. Often, undergraduate students need a co-signer with strong credit and income to qualify for private student loans.