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Does Paying Student Loans Build Credit?


Like other loans, student loans impact your credit if they are repaid on time; if they are paid late, your credit score may suffer. However, student loans might give you more time to make payments before they are recorded as late.

A majority of student loans are installment loans, which you pay back over a predetermined amount of time. As a result of the lender reporting this to credit agencies, you start to build up your credit history. You are entitled to access your data that the credit bureaus maintain. Weekly reports from the three major bureaus are available until the end of the year. Every time you make a payment on time, you'll start building a strong track record of handling credit. Let’s learn more about how repaying student loans build credit.

How Will Student Loans Affect Your Credit Score?

Depending on how you manage your credit, any type of credit you use could impact your credit score. Here is how does having student loans build credit:

  1. Keeping up with your loan payments will improve your credit score
  2. Aids in improving your credit mix
  3. Assists in building a long credit history

1. Keeping up with your loan payments will improve your credit score

For the majority of people, a student loan or education loan may be their first experience with credit. Student loans, unlike other loans, feature a moratorium period that exempts you from repayment for a while and just requires you to pay interest. However, after the moratorium period is up, you must resume making on-time payments on your student loan EMIs. Your credit score can increase if you repay your student loan on time.

2. Aids in improving your credit mix

The percentage of allocation of secured and unsecured loans in your portfolio is known as the credit mix. A responsible borrower should have a healthy balance between the two, demonstrating that the credit was used not only for spending but also for the construction of assets. Depending on your credit score and other considerations, a student loan may be secured or unsecured.

A secured loan, such as a student loan, may improve your credit mix if you have already taken out a credit card or a personal loan.

3. Assists in Building a Long Credit History

Long-term student loans can last for up to 10 years. If this loan is repaid in a timely manner, the borrower will be able to establish a solid credit history, which is one of the key factors in determining creditworthiness. However, if there is a chance for you to pay off the debt early, you may choose to do so after evaluating the benefits and drawbacks.

How Can Timely Payments of Student Loans Help to Build Credit?

For the majority of people, a student loan or education loan is frequently their first experience with borrowing money. Once the moratorium period is over, it's crucial to resume making loan payments on schedule. One of the elements that has a significant impact on your credit score is timely repayment. Timely payment is the key to building good credit. As you make the timely payment, it shows to the lender that you are responsible; hence, the trust factor increases, and this gets reflected in the credit report, thereby improving the credit score.

Forgetting things occasionally has no adverse effects on your credit. Your credit score won't begin to decline until your lender informs one or, more likely, all three of the main credit bureaus about your late payment.

Your late payment, commonly known as a delinquent, will remain on your credit record for seven years if your lender does report it. Your credit will be harmed more severely the longer your payment is past due. The longer your payment is past due, the more harm it does to your credit. For instance, the loan will default if you miss 270 days of payments on a federal student loan. That will damage your credit much more than a delinquent of 30 or 90 days.

How To Manage Student Loan Payments?

After knowing in detail about do student loan payments build credit, let’s explore in details how you can manage your student loan:

  • Count up your loans
  • Examine any specific programming
  • Examine your options for refinancing and consolidation
  • Don't put college loans ahead of everything else

Let’s get into the details.

  • Count Up Your Loans

Federally or privately issued student loans are both options, and the interest rate on each loan may vary based on when you took it out. To get a list of your loans, the amount you owe, and the monthly payments for federal loans, go to the National Student Loan Data System. To get a clear view of how much you need to set aside each month in your budget, you can also include your private loans in this list.

  • Examine any specific Programming

Keep your eyes and ears alert while discussions regarding federal forgiveness are ongoing. Governmental or non-profit organizations offering student loan forgiveness programs could include hospitals and universities.

To be sure you understand your eligibility to join; please review the regulations. Some employers might also provide rewards for paying off college loans.

  • Examine Your Options For Refinancing And Consolidation

Consolidating your student loans into a single loan with a single monthly payment may be beneficial if you have multiple loans for school. Alternatively, if you have a loan with a high-interest rate, you might attempt refinancing it.

  • Don't Put College Loans Ahead Of Everything Else

Make sure you're still managing your money wisely in other areas, even though student debt may seem a big burden. Making the minimum payment on each of your student loans should be your top focus. The next step is a decision. In order to avoid losing money, you might feel comfortable contributing more towards receiving your employer's retirement match. Or if you want to pay down your credit card debt, which likely has a higher interest rate than your student loan and makes borrowing money more expensive.

You can discover a solution to manage your student loans without having a negative effect on your financial future by looking at all of your options.


If you don't pay off your student loans on schedule, it could harm your credit score. Any bad payments may appear on your credit report for up to seven years, and even one missing payment can drastically lower your score.

Benefits of Paying Student Loans with a Credit Card

The advantages of using a credit card to pay for your student loans can differ from person to person, but the following are the primary perks to think about how student loans build credit:

  • Earn rewards for your purchases

You can accumulate points and miles on those purchases when you pay for student loans and other payments using a card that offers rewards. Just keep in mind that any costs you pay will reduce the earnings you receive.

  • Obtain 0% APR for a short period of time

Paying qualified student debt with a credit card could help you save money on interest if you can secure a 0% introductory APR. You might save money using the card to pay your student loan and then pay off the debt during the introductory APR term.

  • Gain time before making a payment

When money is tight, using a credit card as payment can offer you some extra time before you have to make a payment.

You can use a credit card to pay for your student loans. Opt for a credit card that provides you with ease to pay your bills and rewards and cashbacks, and the best card to fulfill your purpose is the Zolve Credit Builder Card. Remind yourself that there are other options to take into account if you're having trouble making your student loan payments. To get a lower interest rate, a lower monthly payment, or both for your student loans, you might change your repayment strategy or even refinance them.

Frequently Asked Questions (FAQs)

Q. Do student loans build credit?

A. Yes, student loans build credit, given that you make timely repayment. Having a student loan boosts your credit mix, which is helpful for your score if you've only ever used one sort of credit, like a credit card. It is not worthwhile borrowing money you cannot afford only to have a variety of credit kinds since that is a minor score element. The most significant aspect affecting your credit score is timely payment. Without it, you can't gain momentum. Building credit will be aided by making consistent, timely payments on student loans.

Q. Does repaying student loans build credit?

A. Absolutely, repaying student loans will have a positive impact on your credit reports. Student loans allow you to demonstrate that you can pay off your debt on time, which is a crucial factor in determining your credit score and a sign that you are a responsible credit user.

Q. Does making payments on student loans improve credit?

A. Your credit score can rise if you pay off your student loans on time. Both the VantageScore® and FICO® scoring models consider your payment history to be one of the most significant factors in determining your credit score. Increased average account age and a diversified account mix are other ways that student loans improve your credit.

Q. Should I use a credit card to pay off my student loans?

A. Despite the numerous drawbacks, credit cards can ultimately be utilized to pay for other obligations and student loans. Whether or not it is a good idea is totally up to your current income and financial commitments, but it could be advisable to use a credit card to make a payment.

Q. Is it worthwhile to pay off student loans early?

A. Since you'll be paying less interest, paying off your private or federal loans early can help you save thousands of dollars over the course of your loan. If you do have high-interest debt, refinancing your student loans will help your money work harder for you.