Student aid affects your credit score by improving your credit score when you make consistent and on time payments on the student aid.
Although if you miss payments or default on your student aid and default on the student aid loans it can lead to a decrease in your credit score and can damage your credit.
Although applying for student aid or FAFSA does not affect your credit score.
Consistently paying your student loans on time helps to build a positive payment history, which is what makes up 35 percent of your FICO score.
Although late payments or missed payments, which are usually 30 or more days for private student loans and 90 or more days for federal student loans can result in your credit score dropping.
And defaulting on your student loans or student aid can damage your credit severely for years.
And applying for private student loans or refinancing often results in a small, temporary dip in your credit score due to a hard inquiry.
Student loans and student aid also add to your credit mix, which can also be beneficial for your credit, although paying off a student loan or student aid in full may cause a temporary, slight drop in your credit score.
For federal student loans, you often have up to 90 days of missed payments before it gets reported to the credit bureaus.
And private student loans often have stricter rules, with the late payments on the private student loans often being reported to the credit bureaus much sooner.
If you can't pay your student loans you should contact your student loan lender to explore options like Income Driven Repayment or IDR plans, which can help you lower your student loan payments to as low as $0.00 per month.
Or you can also request temporary deferment or forbearance to pause any payments.
Other options if you cannot pay your student loans is to do debt consolidation, refinancing or for federal student loans you can look into the Fresh Start program for the defaulted student loans.
If you don't pay your student loans, you will get late fees and interest added to the student loans, damage to your credit score and loss of benefits.
Failure to pay your student loans can cause you to lose access to flexible repayment options or deferment/forbearance benefits.
Failure to pay your student loans and even just missed student loan payments are also reported to the major credit bureaus, which lowers your credit score and affects your future ability to get another loan or other loans.
And your student loan becomes delinquent the day after a missed payment, which often results in fees and for private student loans a loss of interest rate reductions.
Eventually if you fail to pay the student loans they can garnish your wages, withhold tax refunds even sue you, which can also ruin your credit for 7 years.
For federal student loans they often go into default status after 270 days without payment or shorter for some private student loans.
Failure to pay your student loans can also cause the entire balance of the student loan to become due immediately.
Student loans are reported as installment debt to the major credit bureaus which include TransUnion, Experian and Equifax.