Will getting a student loan deferral hurt my credit score?

No, a student loan deferral by itself does not affect your credit score. However, in some situations your credit score would be better if you actually avoided taking it. Read on to see how it works.

Key points to remember

  • A student loan deferral does not directly affect your credit score since it occurs with the approval of the lender.
  • Student loan deferrals can increase the age and size of unpaid debts, which can hurt a credit score.
  • Not getting deferral until an account is past due or in default can also hurt a credit rating.

How does deferral of student loans affect my credit?

A student loan deferral or adjournment allows you to defer paying your debt (principal, interest, or both) for a period of time. Your lender may approve your deferral request under a number of circumstances.

Usually these circumstances involve your inability to work: temporary total disability, rehabilitation training program, parental leave (for example, pregnancy or care of a newly adopted or newborn child) or unemployment. Or, they may reflect additional education: medical school residency, full-time graduate scholarship, or at least half-time enrollment in an eligible school. Deferments are also allowed for certain types of jobs: public service (for example, joining the Peace Corps or the armed forces) or teaching in a designated area or school system that lacks teachers.

Borrowers treated for cancer can defer their loan repayment during their plan and for up to six months after treatment ends.

Your credit score indicates whether you are meeting your obligations to your creditors. Usually, non-payment is a prime example of failure to meet obligations. But student loan deferrals are a different case. You don’t just opt ​​out on your own: your lender has approved the request to suspend your repayments. Thus, you delay the end of the agreement with your lender. Therefore, the deferral will not directly harm your credit score.

Disadvantages of deferral of student loans

However, deferral can indirectly hurt your credit score in several ways.

Wait too long

Often people wait until they are behind in their payments to request a deferral. Bad move. As soon as you are 30 days late, your lender may report your payment as “overdue” to the credit bureaus, which can lower your credit score. When your loan payment is 90 days overdue, it is officially “offenderWhen your payment is 270 days overdue, it is officially “in default.” You can imagine the impact of either of these statuses on your score. Deferral will not lower the score further. , but it also won’t help her recover much.

No more debts

If you don’t pay off your loan balance during the deferral period, your credit rating may drop slightly over time. As you know, the total amount you owe versus the amount you originally borrowed affects your credit score, and the less you owe the better. In this case, your debt does not increase, but it does is grow old, and sometimes his age weighs more on the score.


Maximum number of years you can typically defer student loan payments

Also, if you have a private loan or an unsubsidized federal loan, interest will continue to accrue during the deferral period, and this increase in your loan balance could hurt your credit score. If you don’t pay the interest on your loan and allow it to be capitalized, that is, added to the principal, the total amount you pay back over the life of your loan may be higher.

On the bright side, if your credit score is lower than it could be because you owe such a large balance on your student loans, it should start to increase once you start paying off again.

The bottom line

A student loan deferral does not directly harm your credit score. However, that doesn’t do him a favor either. Depending on your situation, a loan deferral may not be the optimal strategy for dealing with your student debt. Before committing to this course, consider options such as refinancing or income-based repayment plans.

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