It’s relatively easy to qualify for a student loan, but when the time comes to begin making the loan payments life can become considerably harder for recent graduates. If you are one of the more than 37 million consumers currently in student loan debt then it’s absolutely critical for you to understand how these loans impact your credit and how failing to pay these loans can haunt you longer than you may realize.
Here are five things to know about student loans and how they affect your credit:
1. Late payments on student loans
Late payments on student loan accounts are going to impact credit scores just like late payments on any other type of credit obligations.
Late payments are virtually guaranteed to cause a drop in credit scores. And while all late payments are bad, missing student loan payments can quickly snowball into a credit report nightmare.
Most consumers who use student loans to finance their education take out multiple loans during college, perhaps as many as one loan per semester. If a college student completes his undergraduate studies in four years he could easily have as many as eight student loans. These eight loans show up on his credit report as eight individual accounts, not one large loan.