Student loans affect your credit in much the same way other loans do — pay as agreed and it’s good for your credit; pay late, and it could hurt it. Student loans, though, may give you extra time to pay before you are reported late.
If you pay late or skip a payment
Forgetfulness happens, and a brief bout won’t impact your credit. Your score will start to drop only after your lender reports your late payment to one or — more likely — all of the three major credit bureaus.
How long before it’s reported depends on the type of loan you have:
Federal student loans: Servicers wait at least 90 days to report late payments.
Private student loans: Lenders can report them after 30 days.
However, lenders can charge late fees as soon as you miss a payment.
If your lender does report your late payment, also known as a delinquency, it will stay on your credit report for seven years.
The more overdue your payment, the worse the damage to your credit.
For instance, your federal student loan will go into default if you don’t make a payment for 270 days. That will hurt your credit even more than a 30- or 90-day delinquency.
If you cannot pay your student loans
Sometimes money gets tight. In those situations, ask your lender about lowering or pausing your monthly student loan payments. You might be able to:
Sign up for an income-driven repayment plan if you have federal loans.
Apply for a modified payment plan if you have private loans and your lender offers this option.
Enroll in deferment or forbearance to temporarily pause your monthly payments.
Changing the terms of your loan does not hurt your credit. As long as you handle payments as agreed — even if that means paying $0 per month — your credit score shouldn’t suffer.