A:

A student loan deferral lets you postpone making payments on your student loan for a period of time. Your lender may approve your deferral request under a number of circumstances, including but not limited to temporary total disability, public service (e.g., the Peace Corps or the Armed Forces), parental leave (e.g., pregnancy or caring for a newly adopted or newborn child), medical school residency, full-time graduate fellowship, teaching in a designated teacher shortage area, unemployment, and full-time or at least half-time enrollment at an eligible school.

Your credit score reflects whether you are meeting your obligations to your creditors. You might think that since you aren’t making any loan payments during a deferral period, you’re hurting your credit score. This is not the case. Since your lender has chosen to let you not make loan payments, you are holding up your end of the agreement with your lender and deferral will not hurt your credit score.

There are a couple of ways that deferral can indirectly hurt your credit score, however:

By waiting too long to request a deferral Don’t wait until you’ve fallen behind on your payments to request a deferral. As soon as you fall behind by more than 30 days, your lender can report your late payment to the credit bureaus, which can lower your credit score.

By not paying down your loan balance during the deferral period, your credit score might be slightly lower than it otherwise would be since the total amount you owe compared with the amount you originally borrowed affects your credit score, and the less you owe, the better. In addition, if you have an unsubsidized loan, interest will continue to accrue during the deferral period, and this increase in your loan balance could ding your credit score. If your credit score is lower than it otherwise might be because you owe such a large balance on your student loans, it should start creeping up once you start repaying your loan.

In summary, a student loan deferral does not affect your credit score. However, there are situations where your credit score would be better off if you would actually opt to not take a deferral. Everybody's situation is different and opting for taking a student loan deferral might be an optimal strategy for some but not for others.

RELATED FAQS
  1. Are personal loans bad for your credit score?

    Discover how taking out a personal loan can affect your credit score, and learn how a personal loan can help your overall ... Read Answer >>
  2. How does applying for student loans hurt my credit score?

    Discover whether shopping for student loans negatively impacts your credit score, and how concentrating your applications ... Read Answer >>
  3. What are the best ways to rebuild my credit score quickly?

    Repair your credit score more quickly by talking to your lender, increasing the credit limit on your existing credit cards ... Read Answer >>
  4. Will having several credit cards hurt my credit score?

    The manner in which you use your credit cards may affect your credit score more than the number of credit cards you own will. Read Answer >>
  5. Does a free credit report show your credit score?

    Find out how you can obtain your credit score, and find out whether your score is included in your free annual credit reports. Read Answer >>
  6. Why don't I have a credit score?

    Learn about some of the reasons why you might not have a credit score, and find out how you can build a good credit score ... Read Answer >>
Related Articles
  1. Personal Finance

    How Bad Is My Credit Score?

    You've seen the number, but what does it mean? Here's how to assess your credit score and get to a better place if needed.
  2. Personal Finance

    The 5 Biggest Factors That Affect Your Credit

    Credit companies rely on these factors to determine whether to lend to you and at what rate.
  3. Personal Finance

    Surprising Ways a Mortgage Affects a Credit Score

    It takes a good credit score to get favorable mortgage rates. Then, how you pay a mortgage will shape your score – just having one can lower it at first.
  4. Personal Finance

    How To Overcome Bad Credit

    Some lenders can look overlook your credit score and assess other factors that fairly determine if you are a reasonable credit risk.
  5. Personal Finance

    4 Habits That Damage Your Credit Score

    Many common money habits can affect your credit score negatively without you even knowing it.
  6. Retirement

    6 Methods to Maintain a Healthy Credit Score During Retirement

    Learn how to improve your credit score during retirement. Your credit score still matters in retirement, and these tips can give it a boost.
  7. Personal Finance

    Your Credit Score: More Important Than You Know

    Credit scores affect key aspects of your personal and professional life. Knowing your score and managing your credit input can make a big difference.
  8. Investing

    Millennials: Prevent a Bad Credit Score

    Here are five ways to help prevent getting a bad credit score that could affect future loan, credit card or mortgage approvals.
  9. Personal Finance

    8 Slipups That Won't Hurt Your Credit Score

    Everyone makes mistakes from time to time, but knowing what actually hurts or helps your credit score will help you present yourself in the best light possible.
  10. Investing

    How To Boost Your Credit Score To Save Thousands

    One of the first steps you should follow before buying a home is to boost your credit score. And how do you do that? Here, we tell you how.
RELATED TERMS
  1. Credit Mix

    The types of accounts that make up a consumer’s credit report. ...
  2. Credit Score

    A statistically derived numeric expression of a person's creditworthiness ...
  3. Credit Utilization Ratio

    An input used in determining a person's credit score. It is the ...
  4. FAKO Score

    A derogatory term for a credit score that is not one of the FICO ...
  5. Credit Scoring

    A statistical analysis performed by lenders and financial institutions ...
  6. FICO Score

    A type of credit score that makes up a substantial portion of ...
Hot Definitions
  1. Co-pay

    A type of insurance policy where the insured pays a specified amount of out-of-pocket expenses for health-care services such ...
  2. Protectionism

    Government actions and policies that restrict or restrain international trade, often done with the intent of protecting local ...
  3. Fiduciary

    A fiduciary is a person who acts on behalf of another person, or persons to manage assets.
  4. Demonetization

    Demonetization is the act of stripping a currency unit of its status as legal tender and is necessary whenever there is a ...
  5. Investment

    An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic ...
  6. Redlining

    The unethical practice whereby financial institutions make it extremely difficult or impossible for residents of poor inner-city ...
Trading Center