While student loans can help you obtain the education that you need to further your career, you should also be aware of how they can impact your finances. Beyond the monthly payments, student loans affect your credit score. Depending on how you manage your student loan debt, student loans can help raise or lower your credit score.

The amount you owe on your student loans will impact your credit score. Therefore if you have a high loan balance, it is your best interest to pay down the debt as quickly as possible to improve your credit score. If you are not able to pay off a high balance for many years, you still have a chance to obtain a good credit score because FICO scores tend to look at revolving credit rather than installment loans when it comes to credit utilization.

When you miss payments on your student loans, you’ll be reported to the credit agencies as delinquent. For federal student loans, the late repayments are reported once you are 90 days late. For private student loans the reporting time may be sooner. A single late payment could potentially lower your credit score more than 80 points, according to FICO.

Defaulting on your loans, meaning that you haven’t made a payment in 270 days or more could result in damage to your credit score that could take years to fix. Furthermore, a default will show on your credit history for up to seven years.

There is no one single answer on how student loans can affect your credit score since it depends on your borrowing history and your ability to repay the debt. However, if you want your student loans to help you improve your credit score, make sure that you make your loan payments on time and in full.

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