How Student Loans Can Help Your Credit Score – CreditSimple
Most news stories about student loans focus on the negative aspects of student lending, including the monthly payments and expensive interest charges over time, but there is one big benefit of student loans young professionals should celebrate: an opportunity to help your credit score.
If you make consistent, on-time payments on your student loans, over time you should see your credit score rise. Let’s take a look at how your student loans help your credit, what you need to do for the best benefit, and what to avoid that could send your credit score to the gutter.
Build your on-time payment history
The first part of using your student loans to build credit is paying on-time. In fact, your on-time payment history is the number one factor in your credit score above everything else.
Turning on automatic payments for your student loans ensures you never miss a payment due date. As an added bonus, most student loan providers offer a small interest rate deduction with auto pay. That is a win-win!
It only takes a few late or missed payments to seriously harm your credit, but it takes years of on-time payments to join the 800+ credit score club. Don’t lose track of your payments to make sure they have the best positive impact on your credit.
If you do miss a payment or pay late, that payment will harm your credit score for seven years. To keep negative information off of your credit report, do everything you need to ensure you pay by the due date.
Also keep in mind that other credit accounts matter just as much as your student loans. Credit cards, auto loans, personal loans, and lines of credit all show up on your credit report just like a student loan.