Student loans usually appear on a credit report as multiple loans, but that doesn’t look bad to lenders.
The reason has to do with the way student loans actually work as opposed to how we think about them.
Because student debt is so prominent in our society, questions frequently arise when young adults begin to understand the gravity of credit and make steps toward gaining control over their financial portrait.
However, simply because private and federal loans can be consolidated, does not mean that they should be in all situations.
Your payment history is 35% of what makes up your credit score, according to FICO, so late payments won’t look good.
But making your student loan payments on time every month can strengthen your credit.
If you’re in a low-paying job with a high amount of student loan debt, this could hurt your credit.
Student loans can also negatively affect your credit if you have a high balance that isn’t budging or, with interest, possibly even growing.
But if you have a high debt-to-income ratio, this could be bad for your credit.
If you read every article on this website, and you only learn one piece of information it should be to not consolidate your federal loans with your private loans.
This is a mistake that could cost you a fortune in the long run.
Having more accounts is not automatically a negative factor in your credit history.
For such installment loans, the important factors are how much total debt you owe and, of course, most importantly if you have missed any payments. It can be helpful if you have education debt from multiple lenders or student loan guaranty companies.