Student loan debt and your credit score: What you need to know


Student loans are often the young American’s first brush with credit. This financial instrument presents a double-edged sword for many students, as the effects can last long after your college years end. 

On the one hand, student loans can have dire consequences on your credit if you’re not diligent or incapable of paying them off. High monthly payments can hurt your debt-to-income ratio and potentially impact future loan qualifications. Failure to pay can lead to negative marks on your credit files. The decisions you make during the first few years of adulthood may take a lifetime to reconcile. 

On the other, student loans can also be an opportunity for young adults to build their credit history. Regular, timely payments can boost your credit score and contribute to a positive payment history, which accounts for 35% of your FICO credit score. 

The key to navigating this financial labyrinth lies in diligently managing your finances. If you're facing difficulty making payments, contacting your lender or loan servicer can open options to help you stay afloat. No matter your financial status, one thing is clear: managing student loan debt is a delicate dance, one that can shape your financial future in profound ways.