{"id":10890,"date":"2023-03-28T13:15:15","date_gmt":"2023-03-28T13:15:15","guid":{"rendered":"https:\/\/varthana.com\/student\/?p=10890"},"modified":"2026-03-02T11:15:17","modified_gmt":"2026-03-02T11:15:17","slug":"how-do-student-loans-affect-your-credit-score","status":"publish","type":"post","link":"https:\/\/varthana.com\/student\/how-do-student-loans-affect-your-credit-score\/","title":{"rendered":"How do student loans affect your credit score?"},"content":{"rendered":"

Many aspire to pursue higher education in fields like MBA, Engineering or other PG courses. These courses can offer better opportunities and learning experiences. However, it also comes with a high cost that may not be affordable for many students like you. That’s why opting for <\/span>student loans<\/span><\/a> to fund education is the right choice.<\/span><\/p>\n

Student loans have become a boon for many underprivileged students who want to pursue higher education in India. According to a <\/span>report<\/span><\/a> by ICRA, the education loan portfolio in India grew at a compound annual growth rate (CAGR) of 17% from Rs 48,400 crore in March 2013 to Rs 75,450 crore in March 2018. The report also projected that the education loan portfolio would grow at a CAGR of 11% to reach Rs 1.4 lakh crore by March 2025.<\/span><\/p>\n

What is your credit score?<\/span><\/h2>\n

Sometimes classified as ‘good debt,’ student loans may be one way to establish a good credit history \u2013 if they are paid off responsibly.<\/span><\/p>\n

Your credit score is a three-digit number that reflects your creditworthiness based on your past and current credit behaviour. It ranges from 300 to 900, with higher scores indicating better credit health. Your credit score is calculated by credit bureaus like CIBIL, based on factors like your repayment history, credit mix, credit utilization and credit inquiries.<\/span><\/p>\n

Your credit score matters because it determines your eligibility and interest rate for any future loans or credit cards. A good credit score can help you get lower interest rates and better terms for your loans. A bad credit score can make it difficult or expensive for you to borrow money.<\/span><\/p>\n

Student loans can affect your credit score in a positive way. These loans can help you build a good credit history if you repay them on time and in full. They can also diversify your credit mix and show your ability to handle different types of loans. However, keep it in mind that <\/span>loans for student<\/span>s<\/span> can hurt your credit score if you default or delay your payments.<\/span><\/p>\n

Here\u2019s what you need to know about how student loans can affect your<\/span> credit score<\/span><\/a>.<\/span><\/p>\n

Can student loans positively impact your credit?<\/span><\/h2>\n

Yes, if you handle them responsibly, they can boost three out of the five factors that determine your credit score: payment history, length of credit history, and credit mix. Student loans can effectively:<\/span><\/p>\n