Student loans could be considered a form of magnanimous debt anyone can ever plan out, but eventually, they do and turns out it is somewhat a favor that you’re doing to your future self. About 44 million Americans have trillions in student loan debt, and that amounts to a very high amount that could impact financial institutions- the math could be done.

However, when it comes to the upside of student loans, it turns out that paying for your hefty college fees isn’t the only thing these student loans are capable of doing. There is more to it, these student loans account to your credit score. This means that long before you would have started to work as a professional, you have been having a credit history all the time. This credit history is accumulated through your payment schedule for your student loans.

Hence, the student loans do affect credit score.

The student loans help consumers be the qualified candidates for many types of other credits which they may require in their life.

How do Student Loans Affect Credit Score?

After learning that yes, student loans do affect credit score, it is imperative to know about the ‘how’ part of it. Some of the ways your student loan impacts your credit score are:

1.    The History of your Credit

One of the important ways your student loan will impact your credit score is through credit history. This means the amount of time that is invested in the credit story of yours. How long the accounts have been functional and their performance. Although this contributes to a good 15% of the credit score on average, it is possible that at an early stage you might not possess a credit history at all. This problem can be solved by asking your parents to authorize you as an authorized user. It will help you reap benefits from their credit history. However, the smart approach is to set the groundwork independently. And by taking a student loan, you are doing just that.

2.    The Diversity of Your Credit

Also known as your credit mix, the diverse portfolio of your credit happens to play a vital role in how the student loans will impact your credit score in the future. As mentioned above, lengthy credit history plays a significant role in setting up a precedent for future credit score and a sound credit report, diverse credit history does a similar job. If you are planning to take out mortgage loans, car loans or any other type of credit, it all counts to the credit buildup and subsequently adds to your credit score. Along with student loans, these various types of loans give an impression of someone on the way to building up a financial record of their own. And this way the student loans and the student-life loans are able to give you ample chance to start collecting credit scores early on.

3.    A Sound Payment History

Your student loans positively affect your credit score if you have maintained a sound payment history. This translates to no payment mishaps and no irregularities at all. Good payment history or rather an excellent one sets precedent for any future loan you might plan to acquire. This is because it helps with adding to the credit score in your credit report. This part alone comprises 35% of the overall credit score and that means this is one of the prime factors of how the student loan will affect the credit score.

In case of missed payments, the penalties are on one side, on the other is the damage incurred to your credit score. Just as sound payment history is beneficial to your credit score, a series of missed student loan repayments translates to irresponsible financial behavior and the impact could be severe depending on the reason behind it and the frequency of it. A negative payment record could also result in a downward spiral of your credit history and thus credit score if proper check and balance aren’t maintained.


The question of how long does it take to build credit score is a sensitive, time consuming and somewhat tedious method of credit score collection, however, there are tools available that assist in the financial aspect to help support students and professionals alike. Also, a credit score is not calculated in the same manner by all the tools but more or less the percentage weightage of the major factors remains similar, thus making them all significant parts of student loans.

Starting early with a credit report with the help of student loan is how the positive impact of healthy financial habits take place. And this also means you do not have to rely a lot on anyone else for debt, as lenders have a tangible figure for a strong reference when there is student loan history to help keep up the credit score.