Learn about credit

Credit reflects how well you’ve handled your finances in the past—your credit history. Building a good credit history can help you throughout your life.

The importance of good credit

Building and maintaining good credit is a lifelong financial skill. It can make a big difference when you apply for a car loan, credit card, lease, mortgage, or even when you apply for a job.

Undergraduate student loans and credit

If you didn’t have a strong or established credit history when you applied for your private student loan, you probably added a cosigner. Their credit history was evaluated along with yours to be approved for a loan.

Undergraduate student loans are one way you can build your credit history. If you consistently make on-time payments, student loans can have a positive impact on your credit score. On the other hand, if you miss payments and fall behind, your actions can indicate that you’re a higher risk to a company considering giving you a loan or credit card. It can also lead to you getting a higher interest rate than someone with better credit.

Graduate student loans and credit

As a graduate student, you may have federal and private undergraduate loans in repayment. It’s just as important that you keep your payments current when you’re a graduate student as when you were an undergraduate. Private graduate loans are credit-based, so your credit history plays an important role in whether you can qualify for a loan. When you apply for a Direct Grad PLUS Loan, the government will perform a credit check to make sure you don’t have an adverse credit history, such as bankruptcy, tax liens, or foreclosures. Learn what’s considered adverse credit

Related topics