Do Student Loans Affect Your Credit Score? Yes, Here's How

Student loans are hitting credit scores harder than ever. Since February, over six million borrowers had new delinquencies reported. Average scores dropped 63–69 points, and more than a million borrowers lost 150+ points in just three months. That is the steepest decline since the Great Recession.

Payment history

Your student loan payment track record is the dominant factor in your credit score. One missed payment can drop your score by 60 to 150 points, especially if you had strong credit. And because each loan reports separately, a single skipped payment often shows up as multiple delinquencies.

If you’re struggling, act before you miss a payment. Federal loans usually aren’t reported late until they’re 90 days overdue, but private loans can appear sooner. Once a late mark hits, it stays for seven years — long after you’ve caught up. Use an income-driven plan or request deferment/forbearance to stay current.

Length of credit history

Student loans often stay on your report for decades. Over time, that helps by boosting your average account age, which improves your score if you keep payments current.

Credit mix

Credit scoring models reward borrowers who can manage different types of debt. Student loans are installment debt, while credit cards are revolving debt. Having both on your report shows you can handle a mix of credit.

The key difference is how balances are treated. Credit card balances drive your utilization ratio, a major scoring factor. Student loan balances don’t — owing tens of thousands won’t drag your score down the same way a maxed-out card would. But if you’re close to paying them off, you may wonder whether your credit score will drop after paying your student loans.

What drags down credit scores isn’t high balances — it’s missed payments. A single delinquency can cut a super-prime borrower’s score by 150 points, while balances alone have little effect.

Student loans are installment debt. That means they don’t inflate your utilization ratio the way credit cards do. You can owe tens of thousands of dollars and still keep a strong score, as long as you stay current.

The catch is that higher-score borrowers now lose the most when they slip:

• Super-prime (780+) average drop of 175 points

• Prime (660–779) average drop of 121 points

• Subprime (below 660) average drop of 42 points

Gen Z is especially exposed: with thinner credit histories, their average score fell to 676, the sharpest decline of any generation.

Refinancing affects your credit differently than repayment history. The impact is smaller, but it still matters.

How refinancing shows up on your credit report:

• Hard inquiries: Each lender you apply with runs a hard pull, which can trim your score by a few points. To limit the damage, it helps to understand how refinancing student loans affects your credit. Prequalifying with multiple lenders uses only a soft pull.

• New account age: Refinancing closes your old loan and opens a new one, lowering your average account age.

• Balance transfer effect: Your total debt doesn’t shrink just because you refinance, so there’s no immediate boost to your score.

Millions of borrowers who lost 60–150 points this year slipped from super-prime into lower tiers, blocking access to refinancing altogether. Gen Z, with average scores near 676, is especially vulnerable.