Here’s Why Your Student Loan Debt May Actually Be Good for Your Credit

Student loan debt can feel very overwhelming. In fact, more than 8 million borrowers have simply given up on trying to make their student loan repayments, according to the U.S. Department of Education. Defaults hit a record high in 2016, with more than 1.1 million loan holders going into default for the first time, the education department announced last year.

Obviously, student loan debt can be a real burden for some borrowers. Paying down debt can be difficult for a lot of people, and not just those carrying student loan debt. But when managed properly, your student loan debt, just like almost all debt, can actually be beneficial for your credit standing. It can even help you qualify more easily down the road for big-ticket loans like mortgages.

Let’s take a look at how your student loans can be a credit benefit, and how you can best manage them so you can reap the benefits of not just your education, but the money you borrowed to get it.


How Student Loan Debt Can Boost Your Credit

Your credit scores are calculated based on certain aspects of your credit report. Most importantly, credit scores take into account your payment history, debt level, age of your credit accounts and the diversity of your debt (we’ll go into that more in a minute).

Because of this, your student loans are considered in calculating your credit scores. And because you didn’t have to already have a credit history in order to get your student loans (unlike a credit card, for example) your loans have helped you to establish your credit history. That becomes helpful when it comes time to applying for a credit card. If you’ve paid your student loans in a timely manner, it shows you’ve been responsible with your existing credit and can boost your chances of getting a revolving credit account (like a credit card) or can even improve the rates at which you get this credit.

Likewise, your student loans also improve the diversity of your credit accounts because they’re considered installment loans.

Because of these facts, you also can consider your student loans a good opportunity to strengthen your payment history, which is the most important aspect of your credit scores.

Of course, all of this is moot if you aren’t making your payments on time. Your student loans can quickly become a credit detriment if you aren’t able to make your monthly payments.

In order to manage your student loans properly, it’s important that you take the steps necessary to manage any and all of your personal finances throughout your life. Those are:


  • Establishing a budget and sticking to it
  • Always making your payments on time
  • Never maxing out your credit card or other revolving accounts
  • Establishing and maintaining an emergency fund


To help you keep up with your monthly student loan payments, it’s a good idea to consider automating your payments. You can do that directly through your loan servicer, or bank, or you can use a service like Pay Down My Debt to help you not only automate your payments, but make extra payments toward your debts that can help you pay them off faster and save money.

Whatever choices you make, the most important thing you can do is to make your payments on time. Your credit scores and your future self will thank you for your diligence.



[Editorial Disclosure: is a service that provides people with tools to pay down their debts through automatic payments. The purpose of this article, however, is not to encourage users to purchase that service. This article is educational and journalistic in nature and aims to help people learn how to pay down their debt, whether they use our site, another, or go it alone.]