If you’re concerned about the impact student loans will have on your financial future, you’re far from alone. And while your primary focus may be on creating a plan to pay off those loans efficiently, it’s important to know that your student loans can influence other areas of your financial life as well, like your credit health. Student loans are a type of installment loan, which work similarly to auto loans and mortgages. While student loans are very different from credit cards, they can play an important role in helping you build credit history and will impact your credit score in various ways.
The most important thing you can do to maintain healthy credit is make sure you’re paying your bills on time — student loans are no exception. Even one missed payment can lower your credit score, and late payments can stay on your credit report for up to seven years. Staying on top of your student loan payback schedules is essential, especially since you may need to pay your loans to different servicers. The National Student Loan Data Systemis a great resource to help keep track of your federal student loans’ statuses and servicer information. Payment history may be the most important factor, but there are other ways your student loans can have an effect on your credit score.