A credit score is a number that summarizes your credit history. Before you borrow, credit scores are used to determine eligibility for PLUS loans, and interest rates for private loans.

It is hard to know for sure how credit scores are calculated, but the creator of these scores, Fair Isaac has said that a large student loan balance may hurt you – but not as much as maxing out your credit cards. Making on time payments can help your score. It is especially important to shop and compare private loans.  Fair Isaac has said that student loan inquiries made during a focused time period (for example 30 days) will have little to no impact on your credit score.

Late payments or loan defaults will hurt your score. If you discharge your loan in bankruptcy, it will no longer be listed as currently in default on your credit report. However, the fact that you filed bankruptcy will be on your credit report for ten years.

The Department of Education, guaranty agencies, and lenders are required to send information about you to credit bureau organizations. They must supply information about the total amount of loans extended, the remaining balance, and the date of default if you are in default. They supply information concerning collection of the loan, repayment status and the date the loan is fully repaid or discharged by reason of death, bankruptcy, or disability. Most private lenders will also report to credit bureaus.

If you default, your loan will be listed as a current debt that is in default. The default will also be listed in the historical section of your credit report, specifying the length of the default. If you repay the debt in full, the debt will no longer be listed as a current debt in default, but it will still be listed on your report for up to seven years. Perkins Loan defaults can be reported indefinitely.

You can get some credit reporting benefits if you rehabilitate or consolidate your defaulted loan.  If you successfully rehabilitate, the loan holder will remove the default notation from the report.  In most cases, however, the other negative history will remain until it gets too old to report.  For more information about rehabilitation, see these FAQs.  If you consolidate, the negative history for the old loan will remain on your report until it gets too old, but your report will show you as current on the new consolidation loan.

You can see a sample credit report on ConsumerInfo.com.