Do student loans affect my credit score?

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Like any type of debt, student loans do affect your credit score. But the impact could be either positive or negative, depending on how you manage your debt. Managing your monthly payments responsibly can boost your overall score while late or missed payments can cause it to drop.

If you’re a prospective borrower, you should also know that your credit score can influence your ability to qualify for a private student loan as well as the interest rate you receive. Applying for private student loans and certain federal loans also involves a hard credit pull, which can cause a slight dip in your credit score. 

Here’s everything you need to know about student loans, the impact they have on your credit score, and vice-versa. 

The FICO scoring model is commonly used to calculate your credit score, giving you a score that ranges from 300 to 850. FICO evaluates several factors when determining your score, and each holds a different weight. These factors include your payment history, the amount of debt you owe, the length of your credit history, your mix of credit, and new credit accounts opened. Here’s how your FICO score breaks down:

• Your payment history: This is the most important element in both models, and can have a significant impact on your credit rating. It looks at how responsible you've been with paying your bills on time in the past.
• How much debt you owe: This looks at several factors, including how much you currently owe on all your debts. It can also include your credit utilization, which is how much of your available credit you use each month. If you regularly charge up to your credit limit, it’s an indicator that you may be living beyond your means.
• Length of your credit history: This reviews the average age of your credit accounts, along with your oldest and newest accounts. Having a longer borrowing history helps improve your credit score.
• Mix of credit: Lenders like to see that you can manage different kinds of credit, such as revolving accounts (like credit cards) and installment loans (like student debt). It’s best to have a combination of different types of accounts.
• New credit accounts: When you apply for new credit, a hard inquiry goes on your record. Too many hard inquiries in a short time makes lenders nervous and can hurt your score.

Positive impacts

• They can help build your credit history
• On-time payments can improve your credit record
• They diversify your mix of credit

Negative impacts

• A hard credit inquiry is required to apply for certain student loans
• Late or missed payments can hurt your credit record
• Defaulting on student loans will damage your credit for years

Here are some of the positive impacts student loans could have on your credit score: 

• They can help you build a credit history: Student loans are often the first debt young people take on. Plus, most federal student loans don’t require a credit check, making it easy for students to qualify. Once you have student loans, they’ll show up on your credit report and can help improve the length of your credit history.
• They can create a positive payment record: Your student loan payments are reported to the credit agencies, and paying your debt on time and in full each month can help you develop a positive payment history. This is the most important factor in your credit score, and can have a big impact.
• They can diversify your mix of credit: Student debt is a form of installment loan, which has a predictable monthly payment. This is different from credit cards, which can have varying payment amounts each month. By taking on student debt, you can help improve your credit mix and show your ability to manage your money wisely.

Here are some of the potential negative impacts your student debt could have on your credit: 

• Credit inquiries can cause a slight dip in credit: Parents and graduates applying for direct PLUS loans undergo a credit check that looks for adverse credit, although your actual score isn’t considered. Private student loan applications also require a hard credit inquiry. To minimize the impact of multiple hard inquiries, try to submit all of your student loans applications within a 2 week time frame, since FICO treats multiple inquiries for the same type of credit as one single inquiry. 
• Late or missed payments hurt your credit history: Late or missed payments will show up on your credit record and can have a profoundly negative effect on your credit score. When you skip a payment, your loan becomes delinquent. If a federal student loan payment is missed for 90 days or more, your loan servicer will report the delinquency to the three major credit bureaus, putting your loans at risk of default. 
• Default can be devastating: If you miss payments for several months, your loan can enter into default. This will show up on your credit record and remain there for seven years. Like bankruptcies and foreclosures, defaulting on student loans can have a serious negative impact on your credit history and take years to recover from.

Good to know:

Federal student loan borrowers in default can take advantage of the Fresh Start program now through September 2024 to remove the default record from their credit report.

Student loans can have positive or negative impacts on credit, but they also determine whether you can qualify for certain student loans in the first place. Credit score requirements for federal student loans exist for only certain types of loans, while credit score requirements for private lenders can vary. Here’s what to know: 

• Federal student loans: Most federal student loans don’t have credit score requirements. However, grad PLUS loans and parent PLUS loans do require a credit inquiry that checks for adverse credit. 
• Private student loans: Credit score requirements vary by lender, but in most cases, you or a cosigner will need to have a credit score in the mid-to-high 600s to get approved for a loan. A higher score also means you’ll qualify for a lower interest rate. 

Compare private student loan minimum credit score requirements by lender: 

Related: Best Student Loans for Bad Credit of 2024

When you refinance student loans, you must apply for a new loan. This can result in a hard inquiry on your credit report which causes a slight dip in your credit score. You’ll also have a new loan on your credit record when you refinance, which can shorten the length of your average credit age. These two factors can have a small, temporarily negative impact on your credit.

However, if refinancing makes loan payment easier and more affordable, you can develop a positive payment history and potentially pay off your balance more quickly, which could improve your credit utilization and debt-to-income ratio.

Tip:

Before applying for a student loan refinance, prequalify with a few lenders first. Unlike applying for a loan, prequalification allows you to receive an estimated rate quote without a hard credit pull.

Related: Can I refinance student loans with bad credit?

You can take several steps to ensure your student loans help — instead of hurt — your credit score. To maintain good credit, follow these tips:

• Always pay on time: Making your payments on time will help you develop a positive payment record, which is a major benefit to your score due to the weight placed on this category.
• Consider an income-driven payment plan: If you have federal student loans, income-driven repayment (IDR) plans cap payments at a percentage of income, making them more affordable. Since they lower your monthly payment, this can also improve your debt-to-income ratio — another factor lenders use, along with your credit score, in determining your eligibility. You can compare federal repayment options using Federal Student Aid’s loan simulator.
• Monitor your credit report for errors: Mistakes can be made on your credit record. Lenders could report payment history inaccurately, or information could show up on your report that isn't even yours. Monitoring your credit can help you to spot these mistakes and dispute them, so they don't unfairly drag down your score.
• Research loan forgiveness: If you can qualify for student loan forgiveness, your loans will be reported as paid once the debt is discharged. This can help your credit history by showing a fully paid-off account.
• Consider refinancing or consolidating student loans: Both of these options can reduce your monthly payment so it’s easier to make payments on time and avoid default. You’ll get a new inquiry on your credit record when refinancing, though, so be aware this could cause a slight short-term decline. However, if payoff is easier with these options, you might also lower your balance faster, which can help with your credit utilization.

Fox Money rating

Fixed (APR)

3.69% - 15.21%

Loan Amounts

$2,001* to $400,000

Min. Credit Score

Does not disclose

Overview

Ascent offers several unique borrowing options that you don’t typically see with private lenders. In addition to traditional student loans for undergraduate, graduate, and medical programs, college juniors and seniors may qualify for its Outcomes-Based Loan — which doesn’t require established credit or a cosigner. Instead, Ascent reviews alternate factors such as your school, major, and GPA to determine your eligibility.
 

Ascent also offers a wide range of loan terms and repayment plans to choose from. You may even qualify for its Progressive Repayment plan, which allows you to start with small payments that gradually increase over time. Borrowers who use a cosigner can release them after as few as 12 payments, though international students don’t qualify for this option. 

Interest rates

Fixed or variable

Minimum credit score

Does not disclose

Minimum income

Does not disclose

Loan terms

5, 7, 10, 12, 15, or 20 years

Loan amounts

 $2,001 minimum up to your school’s annual cost of attendance; lifetime limits of $200,000 for undergrads and $400,000 for graduates

Cosigner release

Eligibility

Must be a U.S. citizen or DACA student enrolled at least half time at an eligible institution. International students with a qualified cosigner may also qualify. Applicants who can’t meet financial, credit, or other requirements may qualify with a cosigner.

Fox Money rating

Fixed (APR)

3.74% - 15.49%

Loan Amounts

$1,000 up to 100% of school-certified cost of attendance

Min. Credit Score

Does not disclose

Overview

Sallie Mae offers the Smart Option Student Loan for undergraduate students and a suite of loans for graduate students. You can borrow up to your school-certified cost of attendance and apply just once annually to get the funds you need for the entire academic year. Plus, applying for a Smart Option Student Loan with a cosigner may help you get a better rate. 

Through Sallie Mae, you can find a variety of loans designed for specific needs, including loans for MBA programs, law school, medical school, and health profession programs.

Interest rates

Fixed or variable

Minimum credit score

Does not disclose

Minimum income

Does not disclose

Loan terms

10 to 15 years for the Smart Option Student Loan; 15 years for law school, MBA, and graduate school loans; 20 years for medical school loans

Loan amounts

$1,000 up to school-certified cost of attendance. Student must be listed as the borrower, and a parent may cosign.

Cosigner release

After you graduate, make 12 one-time principal and interest payments, and meet certain credit requirements

Eligibility

Must be a U.S. citizen or permanent resident enrolled in an eligible program. Noncitizens residing and attending school in the U.S. may qualify by applying with a creditworthy cosigner, who must be a U.S. citizen or permanent resident, and providing an unexpired government-issued photo ID.

Fox Money rating

Fixed (APR)

3.74% - 17.99%

Loan Amounts

$1,000 up to 100% of the school-certified cost of attendance

Min. Credit Score

Does not disclose

Overview

College Ave offers a wide range of in-school loans for nearly every type of degree. There are a number of repayment options, and borrowers can choose a unique eight-year repayment term. Plus, graduate, dental, and medical students receive extended grace periods.

You may get easy funding for multiple years — 90% of undergraduates are approved for additional student loans when they apply with a cosigner. However, it can be difficult to remove a cosigner for your loan later on, as you must complete at least half of your repayment term before becoming eligible. That’s significantly longer than some lenders, which may only require one to two years of payments before releasing a cosigner.

Interest rates

Fixed or variable

Minimum credit score

Does not disclose

Minimum income

Does not disclose

Loan terms

5, 8, 10, or 15 years for most borrowers (law, dental, medical, and other health profession students have up to 20 years)

Loan amounts

$1,000 minimum up to your school’s annual cost of attendance; lifetime limits depend on your degree and credit profile

Cosigner release

Available after more than half of the scheduled repayment period has elapsed and other requirements are met

Eligibility

Must be a U.S. citizen or permanent resident at an eligible institution. International students with a Social Security number and a qualified cosigner may also qualify. Applicants who can’t meet financial, credit, or other requirements may qualify with a cosigner.

Fox Money rating

Fixed (APR)

3.98% - 14.22%

Loan Amounts

$1,000 up to cost of attendance

Min. Credit Score

Overview

Education Loan Finance (ELFI) is a division of Tennessee-based SouthEast Bank owned by Education Loan Finance, Inc., a non-profit whose mandate is to provide access to higher education. ELFI launched in 2015 and offers undergraduate, graduate, and parent private student loans as well as student loan refinancing.

ELFI student loans and refinance loans are available to residents in all U.S. states including Puerto Rico. Borrowers can benefit from no application, origination, or prepayment fees. ELFI also offers flexible repayment terms and competitive rates, however there’s no cosigner release option and the lender doesn’t offer any discounts.

Interest rates

Fixed or variable

Minimum credit score

Minimum income

Loan terms

5, 7, 10, or 15 years

Loan amounts

$1,000 - Cost of attendance

Cosigner release

A cosigner may not be taken off a loan, but the borrower can apply for a new loan without their cosigner.

Eligibility

All 50 states as well as Washington DC and Puerto Rico.

Fox Money rating

Fixed (APR)

3.99% - 15.60%

Loan Amounts

$1,000 to $350,000 (depending on degree)

Min. Credit Score

Overview

Citizens offers a variety of student loan types, including loans for undergraduates, graduate students, and parents. Perhaps the most unique feature of Citizens student loans is the option for multiyear approval. If you qualify, you can apply once and borrow for future years with a more streamlined process that only involves a soft credit inquiry.

Student borrowers can defer payments while in school and for six months after graduating. You can also score a 0.25 percentage point reduction on your interest rate for setting up autopay, as well as an additional 0.25 percentage point loyalty discount if you or your cosigner already have a qualifying account with Citizens.

Interest rates

Fixed or variable

Minimum credit score

Minimum income

Does not disclose

Loan terms

5, 10, or 15 years for student loans; 5 or 10 years for parent loans

Loan amounts

$1,000 minimum, up to a maximum of $150,000 for undergraduate and graduate degrees; $250,000 for MBA and law; and $180,000 or $350,000 for health care student loans, depending on the degree type

Cosigner release

Eligibility

Must be a U.S. citizen or permanent resident enrolled at least half-time in a degree-granting program at an eligible institution. International students can apply with a cosigner who’s a U.S. citizen or permanent resident.

Fox Money rating

Fixed (APR)

4.24% - 14.02%

Loan Amounts

$1,000 to $99,999 annually ($180,000 aggregate limit)

Min. Credit Score

Does not disclose

Overview

Powered by Cognition Financial, Custom Choice offers student loans for undergraduate and graduate students starting at $1,000. You can borrow up to $99,999 per year with a total aggregate limit of $180,000.

If you apply with a cosigner, you may be able to release them from your loan after 36 on-time payments. You can also receive a 0.25 percentage point discount on your interest rate by setting up autopay, as well as a 2% reduction of your principal balance after graduating.

Custom Choice doesn’t charge application, origination, prepayment, or late fees. It also lets you pause payments through forbearance if you qualify for its natural disaster or unemployment protection programs. 

Interest rates

Fixed or variable

Minimum credit score

Does not disclose

Minimum income

Does not disclose

Loan terms

7, 10, or 15 years

Loan amounts

$1,000 to $99,999 per year (lifetime limit of $180,000)

Cosigner release

Eligibility

Must be a U.S. citizen or permanent resident at an eligible institution. You must also meet Custom Choice’s underwriting criteria for income and credit, or apply with a cosigner who does. Eligible noncitizens such as DACA residents can also qualify by applying with a cosigner who’s a U.S. citizen or permanent resident.  

Fox Money rating

Fixed (APR)

4.80% - 8.54%

Loan Amounts

$1,001 up to 100% of school certified cost of attendance

Min. Credit Score

Overview

INvested is an Indiana company that offers affordable student loans exclusively to state residents. Loans are available to Indiana students and parents who can meet income and credit requirements, or who have an eligible cosigner. Borrowers can  borrow as little as $1,001 or as much as the school-certified cost of attendance minus other aid.

INvested provides detailed information on eligibility so borrowers can quickly determine whether to apply for a loan — however, there’s no option to prequalify with a soft credit check. Cosigner release is also available after just 12 on-time payments, considerably shorter than many other lenders. 

Interest rates

Fixed or variable

Minimum credit score

Minimum income

Does not disclose

Loan terms

5, 10, or 15 years

Loan amounts

$1,001 minimum, up to the school certified cost of attendance

Cosigner release

Eligibility

Loans are available to Indiana residents only. Borrowers must have a FICO score of 670 or higher, a 30% maximum debt-to-income ratio or minimum monthly income of $3,333, continuous employment over two years, and no major collections or defaults in recent years. Borrowers who do not meet income or credit requirements can apply with a cosigner.

Fox Money rating

Fixed (APR)

5.75% - 8.95%

Loan Amounts

$1,500 up to school’s certified cost of attendance less aid

Min. Credit Score

Overview

Massachusetts Educational Financing Authority (MEFA) is a not-for-profit lender that offers low-cost undergraduate and graduate school loans to students nationwide. While only fixed-rate loans are available, interest costs may be lower than what you see with other private loans.

While you can apply with a cosigner to lock in the best rate possible, removing that cosigner later may be tough. Only one repayment plan allows cosigner release, and you must make four years of consecutive on-time payments and meet other credit and income requirements to qualify. 

Interest rates

Minimum credit score

Minimum income

Does not disclose

Loan terms

10 or 15 years

Loan amounts

$1,500 minimum up to school-certified cost of attendance

Cosigner release

Eligibility

Must be a U.S. citizen or permanent resident, enrolled at least half time at a degree-granting, nonprofit institution, and must maintain satisfactory academic progress. Must have no history of default on an education loan and no history of bankruptcy or foreclosure in the past 60 months. Applicants who can’t meet the minimum credit and income requirements may apply with a cosigner.

Fox Business does not make or arrange loans.

Student loans and credit score FAQ

Your student loans will influence your cosigner's credit. The loans will be displayed on their credit record as one of their accounts, even if you are the primary borrower. If you’re late making payments or default on your debt, this will damage your cosigner's credit along with your own.

If your student loans are forgiven, this credit account will show as closed and paid in full on your credit record. This could have a positive impact because you will have a lower credit balance and credit utilization ratio.

However, your depth of credit or the mix of different kinds of credit you have could be damaged, because you will no longer have this installment loan to pay. Any negative impact on your credit is typically small and short-term.

Your account will remain in good standing while you are in a period of student loan forbearance or deferment, so there shouldn't be a negative impact on your credit record. Forbearance or deferment are far better options than missing payments or defaulting if you cannot pay your loans at the moment for any reason.

However, interest will typically continue to accrue on your loans while they’re paused. While this won’t hurt your credit, it’s generally best to use this as a short-term solution to keep your balance from growing too much.

Christy Bieber

Christy Bieber has been working full-time as a freelance writer since 2008. She has written blogs, news articles, textbooks, and online courses on the topics of law, finance, and history. She lives with her husband, two children, and beagle.

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