Before a lender approves your loan application, it will pull your credit through a process known as a hard inquiry. These types of pulls can lower your credit score.
Thankfully, the Department of Education does a hard pull only for new PLUS Loan applicants. It doesn’t check your creditworthiness when you apply for a Direct Consolidation Loan through studentaid.gov.
However, private lenders will always pull your credit file whether you’re getting a new loan or are refinancing. The good news is that most credit scoring models treat multiple inquires for one type of loan as a single inquiry if made within a short period of time. (FICO uses a 45-day window. VantageScore uses 14 days.)
If you’re looking to refinance but want to shop around for the lowest interest rate, use a website like credible.com. The company will do a soft pull that does not affect your score and give you personalized refinancing rates.
How often do student loans report to credit bureaus? Loan servicers report late payments on most federal student loans to the credit bureaus after 90 days. Some FFEL Loans are reported after 60 days. Private student loan lenders typically report late payments starting with your first missed payment. The lenders will keep reporting every 30 days until the loan is charged off, which usually happens after your account is 150 days late.
How do student loans affect credit score while you’re in school? Student loan debt can help college students raise their credit score in two ways: increasing the age of their accounts and making monthly payments while in school. Many private lenders allow students to pay their loans instead of putting the account in deferment or forbearance. The added benefit of doing this is lowering the interest that grows on the account.