An installment loan generally has a starting balance that’s repaid over time with a fixed number of payments.
Once paid off and closed, positive accounts can remain on your credit history for up to 10 years, giving you credit for your good payment history.
More information on how student loans affect credit can be found on the Ask Experian blog. Join our live video chat every Tuesday and Thursday at p.m. Rod Griffin, Director of Public Education at Experian, is available to answer your questions live.
Federal loans almost always have better rates and terms than private loans, and once a federal loan is consolidated with a private loan, the benefits of the federal loan essentially disappear.
Therefore, the first step to address student debt is to look at the types of loans held and the consequences of consolidating them.
Even when you are applying through the same lender, you are basically taking out a new loan each semester or year.
Each of those loans is a separate account, so it is standard practice for students to have multiple loans reported in their history.
For example, one thing that you may not know is how a credit check can affect your credit score.
Before you ever open a new account, the mere act of applying for it affects your score.
Student loans usually appear on a credit report as multiple loans, but that doesn’t look bad to lenders.
The reason has to do with the way student loans actually work as opposed to how we think about them.
A paid off loan means you no longer owe that debt, and does reflect positively on your credit scores over time.