A credit score is a number, typically between 300 and 850, that lets lenders know at a glance how safe or risky a debtor is in using credit. Any time you take any action involving credit, this can affect your score. When you have a student loan and have that loan deferred, it will get listed on your credit report, but it typically does not lower your score.
Credit Scores and Reports
Every consumer who has used, applied for or made credit payments has a credit report. These reports contain all your credit history, indicating such information as your history of payments, how many loans you have and what kinds of loans they are. Credit reporting companies take the information in your report and use it to calculate your credit score, a number that represents how good or bad you are at using credit. The scores themselves are meaningless and do nothing more than allow creditors to evaluate whether or not you are a good candidate for a loan.
Factors
Each company that calculates credit scores has its own method for doing so, though these companies typically assign various values to each factor in your credit report. For example, the FICO score, a commonly used credit score, is based on five factors, each making up a different percentage of your score. These factors and their percentages are payment history, 35 percent; amount owed, 30 percent; length of credit history, 15 percent; types of credit, 10 percent; and new credit, 10 percent, according to the My Fico website.
Deferment
An educational loan deferment is when the lender allows the borrower to stop making payments for a set period. Student loan deferments are granted for a variety of reasons; if the student is currently in school or is out of school and experiencing economic hardship, a deferment can be granted, according to the Sallie Mae website. When your loan is in deferment, you are still obligated to pay back the money, but you do not have to make payments right then; thus, your credit score does not indicate that you have late payments. In general, this keeps your credit score steady and may even increase it the longer your report maintains no history of late payments.
Late Payments
In some situations, a borrower with an educational loan may opt to pay the interest during the deferment period. In this situation, the borrower continues to make payments even though the loan is in deferment and may end up lowering her score if she misses a payment. Student loans are like all other loans when it comes to credit scores, and missing a payment will always lower your score. Making timely payments, on the other hand, can result in your score going up.
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