Do Financial Aid Loans Affect Credit History?

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Sobe
 
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Do Financial Aid Loans Affect Credit History?

Postby Sobe » Wed Jun 22, 2011 4:30 pm

If I'm reading this correctly, any type of loan, regardless if it's a federal financial aid loan (from the FAFSA) or one you would get from a bank, will affect your credit history and credit score, correct?

Since I have no credit history and I'm still 21, is this going to be a good thing? This would be an ideal way to build credit as soon as I start paying the loans off, correct? Or does the financial aid loans not report to the three credit reporting agencies?


big37guy
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Postby big37guy » Thu Jun 23, 2011 12:19 pm

Financial aid loans definitely go onto your credit report and affect your score. Yes the agencies will report on time and late payments. They are looked at as "good" debt because paying for your education means that you are more likely to be able to repay other loans in the future.

There is a difference between a bank loan and a federal student loan (obtained by filling out FAFSA). Bank loans are less desirable because they aren't funded via federal programs and the interest isn't tax deductable. You will also probably be charged a higher rate with a bank loan. Good Luck.



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