Student Loan Debt vs. Credit Card Debt. Which Impacts Credit Scores More? – Episode #64

Student Loan Debt vs. Credit Card Debt

Which impacts your credit score more? Answer:  Student loan debt impacts your score less than credit card debt because installment debt hurts less than revolving debt.

• Student loans are an example of installment debt
• Credit cards are example of revolving debt.

You want to make sure that if you’re going to apply some accelerated payments, that you put these against your credit cards first. You want to lower the amounts owed on credit cards and then go after student loans. One more thing, while there are differences between these types of debts when it comes your credit score, in terms of your debt to income ratio which is a common ratio lenders use to make a decision about you, there isn’t a difference. They basically add up all your debt — your credit card debt plus your student loan debt — and make a decision on what your ratio looks like.

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