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

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

If you’re graduating soon and want to buy a new car, planning for an auto loan in Dunnville can pave the way to a smooth experience. If you have a student loan, how does that factor into things? Does a student loan impact your credit score?


Most Canadian students will have some kind of loan. Whether that’s an OSAP loan, central government loan or something else. While they are necessary to help get you through college, what happens afterwards?


Student Loans and Credit Scores


Student loans don’t really take into account your credit score because you don’t really have one at that age. Once you graduate, every type of loan or finance will take your score into account.


Your credit score will influence where you live, what type of apartment you can rent, what type of job you can get, what car you can drive and all kinds of things.


So, maximizing your score can have far-reaching benefits.


As long as you always pay on time, your student loan should help your credit score. It contributes to your credit mix and it will help create a positive payment history.


Credit Mix


Your credit mix is how much debt you have in what form. The wider the mix, the more beneficial impact to your score. As a student loan is one form of credit you can have alongside credit cards and car loans, it can widen the mix.


Positive Payment History


Your payment history makes up 30% of your credit score so it’s a big deal. Always paying your student loan on time will help build that payment history. Miss a payment and your score will take a big hit.


Keep up your payments and your score will climb accordingly.


Don’t Waste the Interest Free Period


Most student loans include an interest free period to help you get on your feet and get established in life. While tempting to keep payments minimal at this time, we would advise against it.


If possible, pay as much as you can during the interest free period. Then, when interest begins to be charged, it will be on a lower amount than it otherwise could be. This could save hundreds, or thousands of dollars over the term of your student loan.


Depending on what you’re doing after college, this may require a little sacrifice. Something most of us don’t want to do while we’re young. But even saving an extra $100-200 per month and paying it off your student loan can help you over time.


If you find yourself in difficulty, don’t ignore it. There is assistance around to help you manage debt and restructure it so it is manageable.


If you think you’re going to miss a payment or are struggling, don’t be afraid to ask for help. Asking for help isn’t the big deal you might think it is and there is help out there.


Then, when you’re in a position for a Dunnville auto loan, you know where to come.


When you’re ready for a car loan, get in touch with the Smithville car loan experts at Northway Ford for great deals on auto finance.


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