A student in a blue shift is standing behind his debt in orange

Student Loan Debt vs. Credit Card Debt: How They’re Different

Milad Hassibi June 5, 2018


If you are a recent graduate repaying a student loan, you may be worried about how you are affecting your credit.

You might be even more worried if you have a large student loan along with a monthly credit card bill you need to pay.

The debt you have makes up a significant portion of your credit score. More than 50% of your credit score is determined by how much debt you have and if you are repaying your debts on time.

However, many consumers are confused as to how student loan debt and credit card debt are different

The Impact

As you may know, 30% of your total credit score is determined by your credit utilization, which isA woman is looking at her statement while in a blue v-neck how much you owe from all your available credit accounts.

This includes all student loans, credit cards, mortgages, auto loans, etc.

However, FICO scores will consider a credit card balance differently than a student loan.

This is because credit cards are considered to be a revolving debt, which means that your payment amount is calculated by how much of your total available credit you’ve used.

On the contrary, student loan debts are installment debts, which is when you pay back a loan with a fixed payment plan and schedule.

If you are tied between paying off your student loans first or your credit card bills, focus on paying off your credit card bills first.

This can have a larger impact on your credit score than you may think. However, be certain to be making at least the minimum payments for each account every month, or else your credit score will take a hit.

The Harm

If you are looking for a student loan, you may be shopping around to find the best deal near you.

When you are searching for a lender, you are allowing them to see your credit report and credit score.

However, it’s important to note that credit inquiries will stay on your credit report for up to 2 years.

Get a Car Loan with Any Credit Along with a Happy Couple and a New Black SUV next to them

Thankfully, the FICO scoring model recognizes that consumers are most likely going to shop around for student loan rates.

This applies to credit cards as well. If you make all your credit inquiries within a 14-45 day range, the inquiries will only count as one single inquiry.

This measure should always be practiced when searching for lines of credit.

Final Note

All in all, student loans and credit cards are a great way to enter the world of credit. If you have less than ideal credit and are in need of a car loan, CrediReady can help.

Our nationwide network of trusted dealers and verified lenders work with buyers in all credit situations. Take a moment to fill out our free no obligation auto loan inquiry form today and start shopping for your new car!



Free Credit Score

Get your free credit score now! Get a copy of your most recent credit score.
get your free score

Auto Insurance

Get your free insurance quote now! Save big on auto insurance today!
get your free quote

Vehicle Warranty

Protect your vehicle and you could save thousands on auto repairs.
get your free quote