Picture this: You’ve been actively making your student loan payments every month, only to find your credit score bouncing up and down like a yo-yo. It’s enough to make anyone feel frustrated and discouraged. But student loans can be a wild card with credit scores.
You’re juggling not just one but multiple balls in the air. Unlike car loans or mortgages, which typically appear as a single installment loan on your credit report, student loans often appear as several loans, each with its own payment history.
This means that if you’re doing great with making on-time payments, your credit score could soar! But on the flip side, if you stumble and fall behind, the late payments can cause your score to take a serious nosedive.
And here’s the kicker: If you default, it’s not just one default status that gets reported to the credit bureaus. It’s a whole bunch of them, all at once.
This will damage your creditworthiness and jeopardize your employment prospects, housing options, access to personal loans, refinancing options, etc.
Here’s what you need to know about how student debt can affect your credit score.