The Positive & Negatives of How Student Loans Affect Credit Score

Published by The Rocket, Date: March 26, 2019
student loans

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If you’ve had to take out loans to pay for your college education, you’re not alone. In fact, the overall U.S. student loan debt is at $1.56 trillion, which far outweighs the total U.S. credit card debt.

That said, it’s important you’re aware of the impact student loans can have on different aspects of your life. For those recently out of college, their biggest concern is usually how they affect your bank account. Here, we’ll focus specifically on how student loans affect your credit score.

How Student Loans Affect Your Credit Score: Positive and Negatives

  • They’ll establish a longer credit history

As much as you may not believe it, there are actually some good things that student loans can do for your credit score. One of which, is the fact that they will give you a longer credit history. The longer you’ve had credit, the higher your overall score will be. For most college students, loans are their first piece of credit, thus giving your score an automatic boost.

  • On-time payments increase your score

Paying loans on time can positively influence your credit score. In fact, your payment will make up 35 percent of your credit score. The better you are at paying off your student loans on time, the more your score will increase. If you don’t have a credit card or an auto loan, paying student loans will be the way you build up your credit score.

  • Missed payments quickly diminish your score

Just as paying your loans on time can positively affect your score, not paying them on time will greatly—and negatively—affect your credit score.  Your payment history can help you just as much as it can hurt you. Bad marks on your credit report will stay there for seven years, therefore affecting your credit score. There are various things that can hurt your credit score apart from student loans, so make sure to read up on those as well.

  • Credit bureaus won’t know how much you make

This is important—credit bureaus are not going to know how much you make each month or year, and they don’t really care either. What they care about is the fact that you are consistently paying off your loans each month. This is your debt-to-income ratio, and it won’t really matter or affect you unless you are applying for a mortgage.

  • You’ll have a diverse credit mix

This won’t have a huge impact on your credit score, but it will affect a small percentage of it. Credit mix is basically the mixture of credit that you have—credit cards, auto loans, even mortgages. As a student, you may not necessarily need to worry about those big ones (mortgages) but either way, the more variety you have, the better it will look on your report.


If you’re feeling overwhelmed by student loans, know that there are many individuals taking the same route in order to receive a higher education. Just remember that as long as you make your payments on time, your student loans will, in fact, be a good thing for your credit.


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