4 Ways Student Loans Can — and Can’t — Affect Your Credit Score

Student loans are becoming more and more unavoidable these days, considering the poor economy and the skyrocketing cost of college. If you’re taking out a student loan, you may have heard one or more rumors about what student loans can do to your credit score. While your credit score is important, we assure you that taking out student loans won’t trash it while you’re busy studying. In fact, here’s four ways that student loans can — and can’t — affect your credit score. Just be sure to make timely payments on your student loans when they come due. Because if you don’t, you will damage your credit score.

1. Paying off your loan early won’t hurt your credit score
Some of the biggest credit score myths about student loans have to do with what might happen if they’re paid off early. A common myth holds that if you pay a student loan off early you’ll save money in interest payments but negatively affect your credit score by making the loan length, or “age,” appear younger. But that simply isn’t true. Although it’s true that the average age of your credit accounts can have an affect on your credit score — namely, the higher the average age, the better — the status of an account (open, closed, paid, unpaid) doesn’t affect the age or your credit score continue reading