How Does Your Credit Score Impact Your Student Loans?


Give Me Some Credit Here!

Written by: Lisa Phelps for Student Choice

If you’re headed off to college for the first time, you may have never given any thought to your credit score or how it affects loans you apply for. You might not even know what a credit score really is, other than a term used in a catchy TV commercial. But if you or your parents are applying for loans to foot the bill for college, now is the perfect time to get a lesson in Credit Scores 101. Are you ready to take notes?


What is a credit score?

Your credit score is a number calculated by credit reporting companies based on a number of factors. Any time you open a credit account (a credit card, car loan, private student loan, etc.) it is reported to the credit reporting companies. If you’re a responsible credit user (basically meaning you don’t have huge outstanding balances and pay your bills on time), it’s a good thing. If you don’t pay bills on time and are saddled with a huge amount of debt, it can be a red flag where credit is concerned. All of this data (and more) goes into figuring your credit score. And just like those college quizzes you’re going to take, the higher the score, the better!


Why does it matter?

Higher credit scores get you something even more important than dean’s list recognition. They show lenders that you are more likely to repay the money they give you. That means you get lower interest rates on loans, and you’ll pay less money out of your pocket over time. Higher scores also help you get approved for new credit without needing your parent as a co-signer (someone who also assumes responsibility for your loan in the event that you can’t repay it).

So what does all of this mean when you’re trying to pay for college? Credit is NOT a factor if you’re applying for most Federal student loans. (Federal PLUS loans will require no history of major negative credit factors such as a bankruptcy.) Private loans, however, usually DO have a credit factor. If you or your parents are applying for a loan like those offered by Credit Union Student Choice participating credit union, your credit score will help determine your approval and interest rate. And a lower interest rate means… what? (Were you taking notes back there?) It means lower payments when you begin repaying your loan, and less money out of your pocket over the years of repayment.


Where can I check out my credit?

free-fico-score-experianDon’t fall for those catchy commercials that promise free credit scores and reports. Most will end up charging you for services you can receive free from each of the three credit reporting companies at While you won’t receive your actual score for free, you can receive a full list of items from your credit history. And you can get your actual score for a small fee, which may be worth it if you’ve never checked it before. The same site offers information about understanding your credit report as well.

Some financial institutions (and maybe even your college) offer whole classes devoted to personal finance and credit scores. Check with your credit union – and if you don’t have a credit union, you can find one below.  If you’re interested in building positive credit history or cleaning up your credit, it’s a great idea to find a free, reputable source for this information. While credit history may not be a factor in all of your college loan applications, it’s never too soon to start building positive credit!


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2 thoughts on “How Does Your Credit Score Impact Your Student Loans?

  1. Pingback: How Do Your Student Loans Affect Your Credit Score | Student Choice Blog

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