Is Your Student Loan Affecting Your Credit Score?

Watch Free Movies and TV shows Apps

🎬📺 Free Movies and Free TV Shows! 🎭🎬

Is Your Student Loan Affecting Your Credit Score?

Image Source: Getty Images

Watch Free Movies and TV shows Apps

🎬📺 Free Movies and Free TV Shows! 🎭🎬

When it comes to your credit score, large debt is generally considered bad. And since a student loan is probably one of the largest amounts you owe, it’s natural to wonder how it will affect your credit.

Find out which credit cards you can now qualify for

Use our free Credit Card Eligibility Checker to find out which credit cards you qualify for. It only takes a few minutes and will not affect your credit score!

Find out which credit cards you can now qualify for

However, you don’t have to worry and here’s why.

Your student loan does not appear on your credit report

Yes that’s right. If you have a student loan in the UK, it will not appear on your credit report. So if you apply for a credit card, loan or mortgage and the financial services company does a credit check on you, your student loan will not come into the picture. Hoera!

However, some financial service providers may ask you specifically whether or not you have a student loan. Providers will want to include it as a factor in an affordability check.

Does your loan affect your ability to borrow?

As I mentioned, some providers may specifically ask if you have a student loan. Lenders consider many factors when assessing whether or not to approve a loan application. One way they do this is by looking at your credit report. But they also look at your income and expenses and how much you can afford to pay back each month.

This is where your student loan can become a factor. If you earn more than the threshold and you repay your student loan, it affects your disposable income. The amount of your repayment depends on how much you earn. The more you earn, the more you pay. The repayment is calculated as a percentage of all income above the threshold.

Could you be rewarded for your daily expenses?

Rewards Credit Cards include schemes that reward you for using your credit card. When you spend money on a rewards card, you can earn loyalty points, vouchers for in-store air miles and more. MyWalletHero makes it easy for you to find a card that fits your spending habits so you can get the most out of your rewards.

This will probably only be considered if you want to borrow a larger amount, such as a mortgage. However, since your student loan repayments are made automatically through the tax system, it is likely that you are already basing your monthly budget on the repayment of your loan. Essentially, it is not an additional payment that you have to make with the money available to you.

What else can affect your credit score?

The top things that can affect your credit score are missed payments, large amounts of unpaid debt, or things like exceeding your credit line. It can be all too easy to make purchases on your credit card or maximize your overdraft, but these are all things that will likely count against you in your credit report.

With your credit card, be sure to make your monthly minimum payments as any missed payments will leave a mark on your record. Also try to pay off your balance in full every month to avoid falling into a black hole with interest.

Also, when standing over, try to use only a pre-arranged red standing. Using an unauthorized overdraft facility may incur charges and may also appear on your credit report.

Your credit report shows how much you currently owe and therefore how much credit you have at your disposal. If you want to have a good credit score, start paying off your credit card, loan, and overdraft debts as soon as you can. These should be prioritized even if you find yourself with some extra cash and considering overpaying your student loan.

How These 5 Credit Card ‘Must-Knows’ Can Help You…

We all know that a bad credit history makes it difficult to borrow money – but did you know that improving your credit score can also help you get lower interest rates on credit cards, saving you hard-earned cash?

Find out how to improve your credit score and your chances of applying for credit with our free report “5 things to know before applying for a credit card”.

Enter your best email address below for instant access to your free copy.

Was this article helpful?


Some of the offers on MyWalletHero are from our partners — that’s how we make money and keep this site going. But does that affect our ratings? No. Our commitment is for you. If a product isn’t good, our rating will reflect that, or we won’t list it at all. While we strive to offer the best products available, we don’t review every product on the market. Read more here. The above statements are from The Motley Fool’s only and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, serves on the board of directors for The Motley Fool. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard and Tesco.

Watch Free Movies and TV shows Apps

🎬📺 Free Movies and Free TV Shows! 🎭🎬

This div height required for enabling the sticky sidebar