Do my student loans lower my FICO score?

Question

I am paying my students loans on a monthly basis. How will my loans affect my FICO score?

Answer 1

Generally speaking, the mere fact that you have student loans will neither decrease nor increase your credit score. Your FICO score is primarily a reflection of your payment history. It's used to show creditors how well you manage your current debt-load so they can determine how well you might handle other debt.

Here are the things that make up your FICO score:

* Payment history - 35%
* Amounts owed - 30%
* Length of credit history - 15%
* New credit - 10%
* Types of credit used - 10%

Student loans are usually seen as a "good" type of credit (as opposed to, say, a personal loan). Making regular payments on ANY type of loan is the biggest part of keeping your credit score healthy. For example, if you continue to make regular payments on your student loans and didn't obtain any new credit, you would see a gradual increase in your credit score. This would be because (a) your payment history is solid (b) your amounts owed are decreasing and (b) the length of your credit history is increasing. Conversely, if you fail to make your payments on time (or at all), your credit score will almost definitely decrease (even one missed payment can hurt you).