Whether you’re making your payments on time, paying extra every month, or struggling to pay the debt, student loans impact your credit report and score – for the good and the bad.Here’s how: Any time you fail to make a student loan payment on time, this is going to have a negative impact on your credit.So even though it could lower your score initially, keep in mind that paying off a student loan earlier means you’ll pay less in interest overall.It’s also going to decrease your debt-to-income ratio.According to Equifax, student loans are often viewed as “good debt,” since it’s an investment in something that will build value (you hope).But if you have a high debt-to-income ratio, this could be bad for your credit.Just like the other issues, it depends on your situation.As always, research the options but consider what is going to be best for you.
Loans that are unsubsidized, with interest, can grow during a deferment. News, a deferment can improve your chances of being approved, since the lender sees you aren’t required to make payments toward your loans at that time.
Also, if you’re able to qualify for a lower interest rate on this consolidated loan, you’ll pay less over time. Approximately 22% of borrowers are unable to pay their loans, according to the The Wall Street Journal, which notes that these borrowers have loans that are either in forbearance or, much worse, in default.
Not only will ignoring your student loans ruin your credit, but it will have a slew of other negative results on your life. If you had a parent or relative nice enough to co-sign your loan, non-payment will hurt their credit, too. Department of Education, loan services will report your delinquency of 90 days to the three major credit bureaus.
You’re showing that you’re managing your debt correctly and are able to pay your loan as agreed.
Student loans are often treated as installment plans on your credit report.