Georgia Student Finance Commission


Borrowing Impacts Credit - Credit Score

College Money Matters

Borrowing Impacts Credit - Credit Score

Borrowing Impacts Credit - Credit ScoreWhat is your credit score? The credit score is simply a number that is calculated based on your credit history.

Think about your GPA. It is a number which is calculated based on your transcript. The higher the GPA, the more successful the student. Take the same concept with credit. The higher your credit score, the more successful the borrower.

The person doing the calculating makes a difference on your GPA and the same is true for your credit score. There are multiple credit scores from a number of formulas created by different companies.

    • myFICO - The most widely used credit score by lenders. There is a fee to view your credit score.
    • Vantage Score - A credit score created by the three credit reporting agencies.
    • There are other sources to view your credit score. For examples, your credit score might be included in your credit card bill, bank/credit unions and websites. Just remember, their calculations may be different than FICO or Vantage.

What can you do to have the highest credit score possible?  Following the suggestions below can help improve your score.

  • Pay your bills in full and on time.
  • Avoid using the maximum available credit. To reduce the debt on credit, pay more than the minimum monthly payment and avoid additional interest.
  • Once you have established a good account, keep it open.
  • Avoid applying for credit often; only apply for credit when you need it.

So where do student loans fit into all this credit business? First and foremost, it is a loan that has to be repaid. Therefore, it is credit and once in repayment, how you make payments will be reported to the credit reporting bureaus.

When borrowing from the federal government, they actually don’t check your credit report/score. Because the money is being used toward an education, the idea is education will help you not only repay the loan, be a good member of society and a future leader of the country. It will definitely affect your report/score and how other lenders view you as a borrower. Don’t fail at your first chance to establish good credit.