How does student loan forgiveness affect your credit score?

SHREVEPORT, La. (KSLA) – As federal student loan debt for some is being wiped away, some people might be wondering how this could impact their credit score. KSLA is getting answers on what people need to know to stay in good standing.

Mortgage, student, personal, and other types of loans can influence your credit score in several ways. So how do loans impact your credit score?

“In some cases, a student loan is the loan and strongest trade line for an individual. So if you’re paying it correctly, it’s actually a great benefit to you. But if not, it’s dragging your score down,” said Walter Anderson, managing partner at WAND Consulting, llc.

WAND is a financial literacy group that serves clients nationwide, including in the ArkLaTex. Anderson says the length of history on the average credit report accounts for 15% of someone’s credit score, and loan forgiveness doesn’t necessarily equate to a score increase.

“So in some cases, this forgiveness to people is a gift and a curse. The debt will be relieved, but you’re going to lose maybe six years of credit history, so you’re going to see your score decline as a result of that,” Anderson said.


  • Communicate with your lenders.
  • If you’re going to miss a payment, call ahead and let them know. That way, they can mark it as “no data” instead of dinging your credit.
  • If you’re making payments higher than the amount due, note that the overage is being applied to the principal and not the interest.

“Anytime that you’ve got finance debt and you pay over, the lending company is going to pay off the interest or pay themselves first before they take it off of your balance. That’s why its so important that you specify that that amount is going to go on the principal,” Anderson said.

Anderson says the main thing to remember is your credit score responds to activity, so by paying on time with any amount, you’re positively impacting a portion of your report that counts for 35% of your overall score.

“The fact that you are making a payment on time really resonates very very well,” he said.