When you borrow student loans as a new college student, you may think you have several years before your debt will impact you. So it might be surprising to find out your student loans could affect your credit while you’re still in school. Students often assume their school loans aren’t reported to the credit bureaus until they’re in repayment, but that’s not the case.
So when do student loans show up on credit reports? Typically, your loans will appear within a few weeks of approval and disbursement. And they can affect your credit in several different ways.
How Do Credit Reports Work?
If you’ve never reviewed your credit reports, you may be unsure how they work. These reports essentially serve as a summary of your financial history. They reflect your use of credit, including loans, credit cards, and other credit lines, and they also show how you handle your payments.
The data on your credit reports comes from your creditors. They share your account information and payment history with the major credit bureaus: Experian, Equifax, and TransUnion. Each credit bureau has its own credit report, so some data will vary depending on which report you view. These reports also help determine your credit score, which can affect your ability to get future loans and credit lines.
What’s Included in Your Credit Reports?
- Your personal information, including your name, address, and birthdate
- Your open and closed credit accounts, including loans and credit cards
- Your payment history, including any late or missed payments
- Public records, such as civil suits or bankruptcies
How Do Student Loans Show Up On Credit Reports?
A common question college students have is, “Are student loans on your credit reports?” The answer is yes. Your federal and private student loans will show up on your credit reports and can affect your credit in several ways:
- Credit inquiry: When you apply for a loan or credit card, the lender typically does a credit check to review your financial history. While federal student loans for undergrads don’t require credit checks, federal PLUS loans and private student loans do. Credit inquiries are listed on your credit report, and every inquiry can cause a slight, temporary decrease in your credit score.
- Installment loan: Lenders report student loans to the credit bureaus as installment loans, which require monthly payments over a set time period. Each of your student loans will appear as its own account, and your credit report will show how much you owe, what your monthly payment is, and your account’s status.
- Payment history: When your student loans enter repayment, your lender will report your payment activity to the credit bureaus. Creditors like to see you have a history of making timely payments, and positive payment history could improve your credit. But if you miss a payment or default on your loans, your lenders will report that information, and late or missed payments can significantly damage your credit.
When Are Student Loans Reported to Credit Bureaus?
Depending on your loan type, you may not have to make payments while you’re in school. With federal undergraduate loans, your payments are deferred while in college and for six months after you leave school or graduate. With private student loans, the timeframe for repayment depends on your loan terms. You can often choose to defer your payments until after graduation, but many students opt to make partial or full payments while in school to reduce accrued interest.
Why is knowing your payment schedule important? Many people mistakenly believe their student loans aren’t reported to the credit bureaus until the loans are in repayment. But your loans typically appear on your credit report immediately after you undergo a credit check. And once your loan application is approved, the loan will be listed as an active installment account on your credit report.
The timeframe in which your loans appear on your credit report depends on your lender. But your student loans will likely show up on your credit report a few weeks after they’re disbursed.
Learn More: Does Paying Off Student Loans Help or Hurt Your Credit Score?
Regularly Review Your Credit Reports
Even if your lender doesn’t require student loan payments while you’re in school, it’s smart to check your credit reports for the following reasons:
- You may find incorrect information: You might spot errors on your credit reports — such as loans that don’t belong to you or incorrect balances — that could affect you later. If that happens, you can dispute the incorrect information with the credit bureaus.
- You can locate your loans: You might take out several loans during your college career. It can be difficult to keep track of them, and to make things more complicated, lenders often transfer loans to third parties. Checking your credit report allows you to find out who’s managing your loan, simplifying repayment once you leave school.
- It could protect you: Checking your credit reports regularly can safeguard you from financial fraud; this is especially true if your wallet was stolen or you’re a victim of identity theft. It’s wise to check your credit report to ensure no one is using your information to apply for credit.
Checking your credit reports is simple. You can view them from each of the three bureaus weekly for free by entering some basic personal information at AnnualCreditReport.com.
