When you take out student loans as a new college student, you may think you have several years — at least until after you graduate — before your debt will impact you. So it can come as a surprise to find out your student loans can affect your credit while you’re still in school.
Most people assume that student loans aren’t reported to the credit bureaus until the loans are in repayment, but that’s not the case. When do student loans show up on credit reports? Typically, the loans appear within a few weeks of your approval and loan disbursement. And your loans can affect your credit in several different ways.
How Do Credit Reports Work?
If you haven’t looked up your credit reports, you may be unsure how they work. Your credit reports reflect your use of credit — including loans and credit cards — and how you handle your payments. Your creditors, such as banks or credit unions, report your information to the major credit bureaus: Experian, Equifax, and TransUnion.
Each credit bureau has its own report, so some information can vary depending on which credit report you view. The information on your credit reports also determines your credit score, which can affect your ability to get other forms of credit. Information on your credit reports include:
- Your personal information, such as past addresses and employers
- Your open and closed credit accounts, such as loans and credit cards
- Your payment history, including any late or missed payments
- Public records, such as civil suits or bankruptcies
Do Student Loans Show Up On Credit Reports?
A common question college students have is, “Are student loans on credit reports?” The answer is yes; your federal and private student loans will show up on your credit reports.
Student loans can affect your credit history in several ways:
- Credit Inquiry: When you apply for a loan or credit card, the lender typically performs a credit check to see if you are a responsible candidate. While federal student loans for undergraduate students 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 decrease in your credit score.
- Installment Loan: Student loans are reported to the credit bureaus as installment loans, meaning they require monthly payments over a set period of time. Each student loan you take out 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 loans enter repayment, your lender will report your payment activity to the credit bureaus. If you make all of your payments on time, that’s a good thing; creditors like to see that you have a history of making timely payments, and positive payment history can improve your credit. But if you miss a payment or default on your loans, the lender 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, when your loans enter, repayment depends on the loan’s 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 that their student loans aren’t reported to the credit bureaus until the loans are in repayment. But your loans can appear as a credit inquiry on your credit report immediately after you undergo a credit check. And once your loan application is approved and disbursed, the loan is listed as an active installment loan on your credit report.
When exactly your loans show up on your credit report is based on when your lender submits your information. Lender reporting schedules can vary, but your student loans will likely appear on your credit report within a few weeks after their disbursement.
Reviewing Your Credit Reports
Even if you don’t have to make payments while you’re in college, it’s a good idea to check your credit reports for the following reasons:
- You may find incorrect information: You may spot errors on your credit reports — such as loans that don’t belong to you or wrong addresses — that can affect you later. If that happens, you can contact the credit bureaus to dispute the incorrect information. Especially if your wallet was stolen or you have been 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.
- You can locate your loans: During your college career, you may take out several loans. It can be difficult to keep track of them and to make it more complicated, lenders often transfer loans to third parties or even sell loan accounts. Checking your credit report allows you to find out who is managing your loan, making it easier to make payments once you leave school.
Typically, you can view your credit reports from each of the three major credit bureaus once per year at no cost. However, the three credit bureaus announced that they are allowing consumers to view their credit reports for free on a weekly basis through 2023. You can view your credit reports at AnnualCreditReport.com.