Student Loan TRUTH & LIES Part 1| How Student Loans HELP and HURT Your Credit Score
Do Student Loans Affect Your Credit Score?
Student loans are a common way for people to finance their college education. But when it comes to their credit score, do student loans have a positive or negative effect?
In short, student loans can affect your credit score in both positive and negative ways. On the one hand, having a student loan can be a positive sign for lenders, indicating that you are responsible and capable of taking on debt. On the other hand, failing to make payments on time or defaulting on a loan can have a negative impact on your credit score.
To better understand how student loans affect your credit score, it’s important to consider the different types of loans available and how they are reported to the major credit bureaus.
Types of Student Loans
There are two main types of student loans: federal and private. Federal student loans are offered by the U.S. Department of Education, while private student loans are offered by banks and other financial institutions.
Federal student loans are typically more favorable than private student loans, as they often come with lower interest rates, more flexible repayment options, and access to loan forgiveness programs. Additionally, federal student loans do not require a credit check, meaning they won’t affect your credit score if you are approved for them.
Private student loans, on the other hand, often require a credit check. This means that if you are approved for a private student loan, it will be reported to the major credit bureaus, which can have an impact on your credit score.
How Student Loans Affect Credit Scores
When it comes to how student loans affect credit scores, the most important factor is whether you make your payments on time. If you consistently make your payments on time, it will likely have a positive impact on your credit score. On the other hand, if you fail to make your payments on time, it could have a negative impact on your credit score.
In addition to making your payments on time, having a student loan can also be seen as a positive sign by lenders. This is because it shows that you are capable of taking on debt and managing it responsibly.
Finally, it’s important to note that defaulting on a student loan can have a particularly negative impact on your credit score. Defaulting on a loan means that you have failed to make payments on the loan for more than 270 days, and it can stay on your credit report for up to seven years.
Key Points
• Student loans can affect your credit score in both positive and negative ways.
• There are two main types of student loans: federal and private. Federal student loans do not require a credit check, while private student loans often do.
• The most important factor is whether you make your payments on time. Consistently making your payments on time can have a positive impact on your credit score.
• Defaulting on a loan can have a particularly negative impact on your credit score and can stay on your credit report for up to seven years.
People Also Ask
Q: Do student loans show up on credit reports?
A: Yes, student loans can show up on credit reports. Federal student loans do not require a credit check, but private student loans typically do, and they will be reported to the major credit bureaus.
Q: How do student loans affect your credit score?
A: Student loans can affect your credit score in both positive and negative ways. Making your payments on time can have a positive impact on your credit score, while failing to make payments on time or defaulting on a loan can have a negative impact.
Q: How long do student loans stay on your credit report?
A: Student loans typically stay on your credit report for up to seven years. However, if the loan is in default, it can stay on your credit report for up to seven years after it is paid off.
Do Student Loans Affect Your Credit Score – How to Choose
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I had a lot of questions recently about student loans and how they affect the credit score and what to do if you got behind on them and if they can ever be discharged or wiped away, and other questions like that.
This is part one of what will be at least a three part series explaining the truth about student loans as they pertain to credit and some of the myths and outright lies that people are putting out on the Internet, particularly on YouTube, regarding student loans. This episode will be generally about how student loans affect your credit score including how to help it and how they can potentially hurt it. Part two which I will release the week following this video is going to explain discharge cancellation and forgiveness of student loan debt. Part three will talk about bankruptcy as a tool for discharging student loan debt.
At the time of writing this video approximately 44 million Americans share about $1.5 trillion in student loan debt. By way of comparison the total US national debt is about 22 trillion, with an expected rise of 1.2 trillion per year according to some economists. there’s both good points and bad points to student loans. The obvious upside is you use them to get an education. If you been following any of my videos you know that I’m big on education; after all, I don’t provide a credit repair service, I teach you how to fix your credit yourself so that you have the tools to do so for a lifetime.