Student loans have toppled more than 1.4 trillion dollars in the United States.  Student loan debt represents one of the country’s most significant and widespread of financial burden, according to Experian.com.

And while the amount of student loan debt is on the rise, one question many borrowers often ponder is how does it impact credit scores.

Student loans can help your credit score 

Payment History: While student loans are often looked at as a burden, it can actually help your credit score.  Keep in mind, making timely payments towards your student loan debt not only reduces your loan but can positively impact your credit score.  Since your credit score comprises 35% of payment history, making timely payments can help boost your credit.

Time of Loans/Credit Mix: In addition to payment history, if you have been making payments on your loan for many years and have a diverse mix of credit lines, this can help boost your credit score.

Student loans can also negatively impact your score 

One missed payment can send your good credit score plummeting.  A missed payment can reduce your credit score by 90 to 110 points!  This could be drastic for someone who has a good to excellent credit score.   Keep in mind a late payment can remain on your credit report for up to seven years.  In addition to a missed payment, a student loan default can have a more negative impact on your score.  A default takes place when a borrower misses a series of payments.

How to move from the negative to positive

If you have fallen behind on your student loans or expect that you may, be proactive.  If you contact your student loan provider prior to a missed payment, you may qualify for a deferment or forbearance.  Placing your account in this status will not hurt your credit score.

If your student loan is already in default, consider student loan rehabilitation.  This is the ability to remove the default from your credit report.  Late payments made prior to the default will not be removed, but will stay on the credit report up to seven years. Keep in mind this is only available to federal loan providers.  In order to qualify, you must contact your credit provider and make reasonable payments upon agreement.

Kemberley Washington is a certified public accountant, author, and financial news contributor.  She is the author of The Ten Commandments to a Financial Healing, It all Starts with a Budget, and The BADGE Financial Planner.  Follow her at @kemcents.