Loans & Credit Score

[PAPERCLIP_DPT]

Hi everyone, I was wondering if anyone had insight on how graduate student loans (particularly the Graduate Stafford Loan and Grad PLUS Loan) affect credit scores?

During my undergraduate career, I took out loans, but they are currently deferred while I'm in graduate school. I am aware loans taken during your graduate years start accruing interest immediately as opposed to undergraduate loans which remain constant while you're in school.

Has anyone who has taken out graduate student loans notice their credit score affected (due to the accrual of interest)? Would you recommend to pay off the interest on a monthly or yearly basis? Or would it minimally impact my credit score and I would not need to worry about paying anytime soon?

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[theheartyroots]

Hi!
I graduated in a similar situation you are in. I have ~85k in stafford grad loans and grad plus loans, all about 6.8%. no, it does not affect your credit score from what I have seen. Your credit score is something calculated by your credit card company, made by banks to sort of get you in the habit of borrowing money.

It is composed of these things...
FICO's 5 credit score factors

1. Payment history
2. Credit utilization
3. Length of credit history
4. New credit
5. Credit mix

Credit scores are compiled of consumer debt. Student loan debt does not fall in the same category.
I do suggest that you attack the principle ASAP. I paid off 10k to $0 of interest ONLY my first 6 months of working...and then the following month it went up to 1k again... it is seriously terrible how you drown in debt after graduating. Pay ALL your money to your debts and get it out of your life. You accrue student loan debt +interest that creeps on you with a HIGH principle...then you use a credit card and lose control, in which credit cards have up to 21% MONTHLY interest. Don't bury yourself in a hole.

I am writing about my financial journey on my blog and have learned a lot from listening to Dave Ramsey.

Hope this helped.

Good luck!

 

[ya1]

My credit score went up a little bit during grad school while I was borrowing from Stanford and Grad Plus. I made no payments during school. I was paying off my credit card 100% monthly. Not sure what affected the credit score.

 

[astewart1986]

Graduate student loans do not significantly affect your credit score as long as they are not in default and you are making timely payments (if in repayment).