Student Loans and Your Credit Report

Dear Experian,

My student loans are affecting my credit. Why?


Dear NCB,

Student loans are a debt obligation just like any other. New lenders need to know how much you already owe to others so they can determine if you will be able to repay them if they open a new account for you, which will further increase your financial obligations.

Once you open a student loan, the lender may begin reporting it to the credit reporting companies. The account entries will indicate the payment status of the student loans, whether in deferment or in repayment.

You didn't mention how the student loans are affecting your credit. If you are already in repayment status and have made late payments, the delinquencies will appear in the history of the accounts and will affect credit scores and lending decisions. Missing student loan payments is no different than missing payments on any other type of debt. Your payment history is the most important factor in credit scores.

If your loans are not yet in repayment, or there are no late payments on the accounts, the amount of the student loan debt might be affecting your credit scores. Your lenders will consider your student loans as debts that you owe, even if the debts are still in deferment.

The amount you owe on student loans will reduce the funds you have available to repay any other debts, whether from income or other assets. That debt puts pressure on your ability to manage any unforeseen financial challenges, increasing the risk of extending additional credit to you.

Thanks for asking.
The "Ask Experian" team