Student Loans Can Impact Your Credit Score—How to Remove Them

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Apr. 26 2021, Updated 1:48 p.m. ET

For people younger than 25 who carry student loan debt, the average amount owed is $14,807.69, according to the U.S. Department of Education. For all ages, the number is much higher, reaching nearly $40,000 per debtor. These loans have the power to impact your credit score, but how?

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If you miss payments or default on student loans, your credit score will drop. Of course, the loan can increase your score if you're always on time and ultimately pay off the loan. There are also a few scenarios where you can get the loan removed from your credit score.  

Removing a student loan from your credit score

There are two key conditions in which you can get your student loan removed from your credit reports:

  1. If your student loans are reported inaccurately, you can get them removed. Your loan needs to be private to be eligible. This isn't necessarily uncommon, given that Great Lakes Higher Education Corp. reported delinquencies while student loan payments were stalled during the COVID-19 pandemic. (With that said, if you have a loan through Great Lakes, definitely check your credit score and report any inaccuracies.)
  2. If you paid your loan off in full, you are also eligible for removal. However, the process does eventually happen on its own. Any positive impact your payments had on your credit score will automatically come off the report in 10 years. Any delinquencies (like missed payments) will drop off your report after seven years.
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What you need to remove your student loan from your credit

You'll need to file a dispute with the credit bureaus that factor in your student loans (sometimes, one credit bureau might hold on to a collection while the others don't). There are two ways you can file a dispute. 

The first is to do it yourself. Like taxes, filing a dispute on your own can be tricky. Find out if any friends or family members have been through the process before to help you out, just so you don't make any mistakes. You'll have to write a dispute letter, attach any supporting documentation that shows you've paid off the loan or that there's an inaccuracy, and potentially re-dispute if they don't accept it.

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Alternatively, you can work with a credit repair expert to do it for you. Consult reviews from past customers to ensure the company's legitimacy. 

How else do student loans impact your credit score?

Late payments on federal loans get reported to credit bureaus after 90 days. For private loans, it can happen as soon as 30 days past the deadline. If you think you might miss a payment deadline, check out your options for an income-driven repayment plan on federal loans or a modified payment plan on private loans. For some, deferment or forbearance is the only option (which is precisely why student loan forgiveness is on the table during President Biden's early days). 

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Some refinancing options might ding your credit, but you can usually shop around for ones that don't impact your score. 

Making regular payments that are on time each month can build your credit tremendously. However, you might see your score drop after you pay off the loan due to a reduction in your credit utilization. 

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