Your credit score is determined by a variety of factors, each of which makes up a portion of the score:
• Approximately one-third of the score represents the individual’s payment history.
• Another one-third of the score is determined by current debts and the ratio of debt to the amount of available credit.
• The remaining one-third of the credit score is determined by three factors: length of credit history, recent credit applications, and the types of credit used, i.e., student loan, car loan, credit cards, etc.
Your credit will not be hurt by taking out a student loan unless you do not make the payments on time. You also should consider how taking out a student loan will affect your ratio of debt to available credit. The higher amount of debt you have compared to the amount of available credit, the lower your credit score will be.
We would like your feedback on this Personal Finance Frequently Asked Question.
