Student Loans and Your Credit Score
posted
on Wednesday, July 28, 2021
in
Education
It's just about time to head back to school, which means, if you're entering college, you might be taking out a student loan for the first time. Did you know that student loans can affect your credit score?
What is the current student debt situation?
- Total student loan debt: $1.71 trillion.
- Total number of Americans with student loan debt: 44.7 million.
How many people have new student loans each year?
- 54% of college students took on debt to pay for education in 2020.
What are the ages of borrowers?
- People from ages 18 - 62 hold student loan debt.
- On average, people say it takes 18.5 years to pay off student loan debt, starting at age 26 and ending at age 45.
Does a student loan impact your credit score? Yes!
- Hard inquiry on credit report when you apply.
- Shows up on credit report as "installment loans".
They're actually good for your score - adds to your "credit mix" which makes up 11% of your credit score. That is, if you're paying them on time.
College Students and Their Credit Score/Report
- 20% do not have a credit report
- Less than half know their credit score
Cheat Sheet
If you don't make payments on schedule, your credit score will suffer, which means you might miss out on other credit-based opportunities, like buying a car with an auto loan or renting an apartment in the city you're moving to after graduation.
But, if you're paying them down on time, you'll be out of debt sooner rather than later and your credit score won't be hurt.
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Access your credit score* along with personalized tips on how to improve or maintain an already great score with Credit Sense. It's built right into your Northwest Bank Online and Mobile Banking App, so you won't need a new login.
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*The credit score provided is intended to help you understand the factors that affect your credit score, and ways you may be able to save money with Northwest Bank loan products. It is generally not used for loan approval purposes or for determining loan rates. Loan rates and approvals are based on information provided to the bank when you apply for a loan. The credit score found in the credit report may be different than the credit score you see here. The offers presented here are not offers to lend; normal underwriting criteria apply. Terms and conditions and offers are subject to change at any time.