Can student loans impact my credit score?

Yes—student loans can help or hurt your credit score depending on how you manage them. Because student loans are installment debts reported to major credit bureaus, on-time payments build a positive credit history and improve your credit mix. Conversely, missed payments, defaults, or too many loan applications in a short time can significantly lower your score.

Whether you are a student borrowing for the first time or a parent cosigning a private loan, understanding this relationship is vital for long-term financial health. You’ll learn exactly what actions boost your score, which mistakes cause damage, and the specific timeline of how loans appear on your credit report from application to payoff.

Context: How credit scores use student loan data

To understand the impact of student loans, it is helpful to first understand how they appear on a credit report. Student loans are classified as “installment loans,” meaning you borrow a set amount and repay it over a fixed period with scheduled payments. This differs from “revolving credit,” such as credit cards, where your balance fluctuates.

Lenders report student loans to the three major credit bureaus: Equifax, Experian, and TransUnion. Each individual loan often appears as a separate “tradeline” on your report. For example, if you take out a new federal loan for each of your four years in college, you may see four distinct accounts listed, rather than one lump sum.

According to MyFICO.com, credit scoring models calculate your score based on five specific categories as of January 2025. Student loans influence every single one of them:

• Payment History (35%): This is the most significant factor. It tracks whether you make your loan payments on time.
• Amounts Owed (30%): This considers how much debt you carry relative to the original loan amount.
• Length of Credit History (15%): This measures the age of your oldest account and the average age of all accounts.
• Credit Mix (10%): This rewards you for managing different types of credit (e.g., holding both student loans and a credit card).
• New Credit (10%): This factors in how often you apply for new loans or open new accounts.

These percentages represent the general weight given to each category for the general population. Both federal student loans and private student loans report to the bureaus, meaning both have the power to shape your financial profile.

Decision guide: Actions that help or hurt your credit

Managing student loans involves many different choices, from setting up autopay to applying for hardship programs. Use this guide to quickly assess how specific actions will affect your credit profile.

Source: College Finance analysis of FICO scoring factors and credit reporting standards.

If you aren’t sure where you stand, ask yourself these five questions. If you answer “No” to the first three or “Yes” to the last two, you may need to adjust your strategy.

• Are all your loan accounts currently marked as “Current” or “Paid as Agreed”?
• Have you made every payment within 29 days of the due date for the past 12 months?
• Are you enrolled in autopay to ensure you never miss a deadline?
• Have you applied for multiple different private loans in a span longer than 45 days?
• Do you have any payments that are currently more than 30 days overdue?

How student loans build credit (positive impacts)

While debt is often viewed negatively, student loans are frequently referred to as “good debt” because they represent an investment in your future earning potential. Beyond the degree itself, responsibly managed student loans are a powerful tool for establishing a robust credit score.

According to MyFICO.com, payment history accounts for 35% of your FICO score as of January 2025, making on-time student loan payments the most effective way to build credit. Every month that your lender reports your account as “current,” you add a positive mark to your credit file. This consistency proves to future lenders that you are reliable.

Even if you are on an income-driven repayment plan with a $0 monthly payment, your loan servicer reports you as “paying as agreed.” This means you can build positive credit history even when your required payment is zero.

Lenders like to see that you can handle different types of debt. According to MyFICO.com, “credit mix” makes up 10% of your FICO score as of January 2025. If you only have a credit card (revolving debt), adding a student loan (installment debt) diversifies your profile. This demonstrates that you can manage fixed monthly obligations alongside variable spending.

For many young adults, a student loan is the very first account on their credit report. As you keep these loans open over time—typically 10 years or more—they increase the “average age” of your credit accounts. A longer credit history generally leads to a higher score because it gives lenders more data to analyze. According to Sandy Baum, Urban Institute fellow, “Borrowing is not inherently bad; the question is how much, and under what terms.” By managing these terms responsibly, you turn a financial obligation into a credit-building asset.

For more details on how to manage these loans effectively, explore our comprehensive guide to student loans.

What hurts your credit: Negative impacts to avoid

While student loans offer a path to build credit, they also carry risks. Understanding exactly what triggers a score drop can help you avoid accidental damage to your financial reputation.

When you apply for a private student loan (or a parent applies for a Parent PLUS loan), the lender performs a “hard inquiry” to check your credit. According to the Consumer Financial Protection Bureau, a single hard inquiry typically lowers a credit score by about 5–10 points as of January 2025. This drop is usually temporary and recovers within a few months.

However, applying for many loans over a long period can compound this damage. To protect borrowers, scoring models use a “rate-shopping window.” According to MyFICO.com, multiple student loan inquiries made within a 14–45 day window as of January 2025 are typically treated as a single inquiry for scoring purposes. This allows you to shop for rates without wrecking your score, provided you do it quickly.

Missing a payment due date is problematic, but the severity depends on how late you are. Lenders generally do not report a payment as “late” to credit bureaus until it is at least 30 days past due.

• 30 Days Late: The first negative mark appears. This can cause a significant drop in your score.
• 60 Days Late: A second delinquency notation is added, deepening the score impact.
• 90+ Days Late: This is considered a serious delinquency. It signals to lenders that you are at high risk of default.

Per the Fair Credit Reporting Act (FCRA), these negative marks remain on your credit report for seven years, though their impact on your score diminishes over time.

According to Federal Student Aid, default on federal loans occurs after 270 days (about 9 months) of missed payments. For private loans, default can happen much faster—sometimes after just 90 to 120 days of delinquency.

A default status devastates your credit score and can remain on your report for seven years from the date of the first missed payment. It can lead to wage garnishment, tax refund offsets (for federal loans), and lawsuits (for private loans). If you are struggling, look into default rehabilitation options immediately rather than ignoring the debt.

Timeline: Credit impact from loan origination through repayment

Your student loan affects your credit differently depending on where you are in the loan’s lifecycle. Here is what to expect from the day you sign the paperwork until the day you make your final payment.

When you first apply, a new account appears on your credit report. If you applied for a private loan, you will see the hard inquiry mentioned earlier. Your average age of accounts may drop slightly because you have added a brand-new account to your history. This initial dip is normal and temporary.

While you are enrolled in school at least half-time, your loans are typically placed in an “in-school” or “deferred” status. Lenders report this status to the bureaus. Even though you aren’t making payments, this is a neutral-to-positive status. It shows you are in compliance with the loan terms. However, interest may still be accruing on unsubsidized loans, increasing the balance reported to the bureaus. (See our guide on subsidized vs. unsubsidized loans for more details).

For most loans, there is a 6-month grace period after you graduate or leave school. During this time, the status on your credit report will update to “grace period.” Like deferment, this does not hurt your score, but it is the critical time to set up your repayment plan. No payments are required yet, so your payment history technically hasn’t started building in earnest.

This is the most critical phase. Once your first bill generates, every month is an opportunity to build credit. Consistently paying on time during this phase is what generates the long-term credit boost associated with student loans.

When you finally pay off the loan, the account status changes to “Paid in Full” or “Closed.” Interestingly, you might see a small, temporary drop in your credit score when this happens. This is because closing the account can reduce the average age of your credit history or change your credit mix. However, the closed account—and its history of on-time payments—remains on your report for up to 10 years, continuing to contribute positively to your profile.

Federal vs private student loans: Credit reporting differences

While both federal and private loans appear on your credit report, there are distinct differences in how they are managed and reported, which can affect your financial life differently.

Federal student loans are owned by the Department of Education but managed by private servicers (like MOHELA, Nelnet, or Aidvantage). It is common for federal loans to be transferred from one servicer to another. When this happens, the “old” servicer account usually closes, and a “new” account opens with the new servicer. While this can look confusing on a credit report, it generally does not impact your score negatively, as the history transfers over.

Private lenders tend to retain servicing or use a consistent partner, so the tradeline often remains stable under one name throughout the life of the loan. For a deeper comparison of loan features, review our private student loans guide.

The timeline for reporting negative information varies significantly. As noted by Jason Delisle from the American Enterprise Institute, “Federal loans are more lenient… no late fees, unlike private loans.” According to Federal Student Aid, federal loans offer a long runway (270 days) before default is reported, and the government offers a unique “rehabilitation” program that can actually remove the default notation from your credit report after nine on-time payments. Private lenders typically do not offer this; once a private loan default is reported, it usually stays for the full seven years.

One major advantage of federal loans is the application process. Completing the FAFSA triggers a credit check only for Parent PLUS loans or Grad PLUS loans (which look for “adverse credit history”), but not for standard undergraduate Direct Loans. Private loans, however, almost always require a hard credit inquiry for the borrower and the cosigner.

How consolidation and refinancing affect your credit

Many borrowers choose to combine their loans eventually. Whether you choose federal consolidation or private refinancing, the action will impact your credit report.

When you consolidate federal loans through the Department of Education, your original loans are paid off and closed, and a new Direct Consolidation Loan is opened.

• Impact: This can temporarily lower your score by reducing the average age of your accounts (since the new loan is brand new).
• Inquiry: There is generally no hard credit inquiry for federal consolidation.
• Benefit: It simplifies multiple tradelines into one, reducing the risk of accidentally missing a payment on a smaller loan.

Learn more about the mechanics in our guide to consolidation.

Refinancing involves a private lender paying off your existing federal or private loans and issuing a new private loan with new terms.

• Impact: According to the Consumer Financial Protection Bureau, this requires a hard credit inquiry, which may drop your score 5–10 points temporarily as of January 2025.
• Account Age: Like consolidation, this closes old accounts and opens a new one, potentially lowering your average credit age.
• Strategy: According to MyFICO.com, you can shop around for rates within a 14–45 day window as of January 2025 to minimize the impact of inquiries. Do all your applications within this timeframe.

Refinancing is best done when you are not planning another major credit application (like a mortgage) in the immediate future, giving your score time to recover.

Cosigner credit implications

For parents and other family members, cosigning a student loan is a significant financial commitment that goes far beyond simply “vouching” for a student. It creates a legal and financial link between the cosigner and the debt.

When you cosign a loan, it appears on your credit report just as it does on the student’s. Legally, the debt is 100% yours. This means the full balance of the loan is calculated into your Debt-to-Income (DTI) ratio. A high DTI can make it harder for you to qualify for your own loans, such as a mortgage or car loan, even if you have a perfect credit score.

If the student misses a payment, that late payment is reported to the bureaus for both the student and the cosigner. You could see your credit score drop significantly due to an oversight you didn’t even know about. To mitigate this, cosigners should insist on having login access to the loan account or setting up alerts to ensure payments are made on time.

Some private lenders offer “cosigner release” programs. After the student makes a set number of on-time payments (typically 12 to 48 months) and proves they meet income requirements, the cosigner can be removed from the loan. This removes the tradeline from the cosigner’s credit report, freeing up their DTI and eliminating the risk. Note that federal Parent PLUS loans do not offer cosigner release; the only way to remove a parent from a PLUS loan is for the student to refinance it into a private loan in their own name. (See our PLUS vs private loans comparison for more).

Credit recovery strategies after student loan issues

If your credit score has already taken a hit from student loans, do not panic. Credit damage is not permanent, and there are concrete steps you can take to repair it.

If you have missed payments, the most important step is to bring the account current immediately. This stops further negative reporting. While you cannot typically remove accurate late payment history, the impact of a late payment fades over time. A late payment from two years ago hurts your score much less than one from two months ago. In rare cases, if you have a history of on-time payments and missed one due to an emergency, you can call your servicer and ask for a “goodwill adjustment,” though they are not required to grant it.

According to Federal Student Aid, if you have federal loans in default, you have a powerful tool called “rehabilitation.” By agreeing to make nine reasonable, on-time monthly payments within a 10-month period, you can bring your loan out of default. Uniquely, once rehabilitation is complete, the government instructs credit bureaus to remove the record of the default from your credit history. This can cause a substantial jump in your credit score. Read more in our guide to default rehabilitation.

While fixing the loan issues, focus on other healthy credit habits. Keep balances low on credit cards and avoid applying for new credit. Over time—typically 12 to 24 months of consistent positive behavior—your score will begin to recover. Monitor your progress by checking your reports regularly at AnnualCreditReport.com.

Frequently asked questions

Generally, student loans have a neutral impact while you are in school. They are reported as “deferred” or “in-school,” which shows you are meeting the terms of the loan. However, the hard inquiry from the initial application may cause a small, temporary dip.

Student loans themselves do not hurt your credit; mismanagement does. A single 30-day late payment can drop a good credit score by 50 to 100 points. Conversely, maintaining on-time payments helps build a strong score over time.

You may see a slight, temporary drop in your score when you pay off a loan because the account is closed, which can affect your “credit mix” and average age of accounts. However, this impact is usually minor and short-lived compared to the financial freedom of being debt-free.

Yes. Loans paid in full remain on your report as positive history for 10 years. Negative marks, such as late payments or defaults, generally fall off your report seven years after the first delinquency occurred.

Most federal student loans do not require a credit check, making them accessible regardless of credit history. Private student loans and federal Parent PLUS loans do require a credit check; if you have bad credit, you will likely need a creditworthy cosigner to qualify for private options.

Student loans are a double-edged sword for your credit: managed well, they are a powerful building block; managed poorly, they can be a stumbling block. Keep these core principles in mind:

• Builds History: Consistent on-time payments are the #1 way student loans improve your score.
• Avoid Lateness: A payment 30 days past due triggers significant damage; use autopay to prevent this.
• Shared Risk: For cosigners, the loan is fully their responsibility, affecting their DTI and credit score equally.
• Federal Flexibility: Federal loans offer rehabilitation to remove default marks, a benefit private loans lack.
• Recovery is Real: Even with past mistakes, time and consistent payments will heal your credit profile.

Action Items:

• Check your credit reports at AnnualCreditReport.com to ensure all loan data is accurate.
• Log into your loan servicer’s portal and confirm your current status and due dates.
• If you are a cosigner, set up alerts so you know immediately if a payment is missed.

If you need to bridge a funding gap and are ready to borrow responsibly, comparing your options is the best way to protect your financial future.

Ready to compare student loan options? See rates from 8+ lenders in minutes.
Trusted by 50,000+ students and families to compare private loan rates safely.

References and resources

• Federal Student Aid (StudentAid.gov): The official source for all federal loan information, repayment plans, and rehabilitation.
• Consumer Financial Protection Bureau (consumerfinance.gov): Provides guidance on credit reporting laws and managing debt.
• AnnualCreditReport.com: The official site authorized by federal law for free weekly credit reports.
• MyFICO.com: Educational resources on how credit scores are calculated and how to improve them.
• National Foundation for Credit Counseling (nfcc.org): Non-profit organization offering professional financial counseling and debt management plans.