--- title: Why Student Loan Forgiveness Could Hurt Your Credit Score description: About 30 million borrowers could see a reduction in debt from the student loan forgiveness program, however, some might see their credit score dip as a result. authors: - name: Sarah Hansen role: Senior Writer url: https://money.com/author/sarah-hansen/ bio: Sarah Hansen is a senior writer at Money covering all things personal finance. Previously, she covered economic policy and capital markets on the breaking news desk at Forbes. education: Northwestern University, New York University at_money_since: 2021 articles: 347 covers: - Personal Finance - Banking - Business - Career Advice - Credit - Credit Cards - Economy and Politics - Education - Health and Wellness - Housing - Insurance - Investing - Lifestyle - Loans - Mortgages - Professional Services - Retirement - Shopping - Taxes social: - https://www.linkedin.com/in/sarah-m-hansen/ former_staff: true updaters: - name: Taína Cuevas role: Lead Editor, Credit and Credit Cards url: https://money.com/author/taina-cuevas/ bio: Taína Cuevas is a former managing editor at Money, where she specialized in consumer credit, credit cards, and product reviews. She also oversaw Money's financial product compliance department, ensuring the publication provided up-to-date and accurate information. education: Franklin University Switzerland at_money_since: 2018 articles: 27 covers: - Personal Finance - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Pets - Professional Services - Shopping - Taxes - Technology former_staff: true published: '2024-07-03T14:52:34.000Z' modified: '2024-07-03T15:45:21.000Z' section: Personal Finance word_count: 465 canonical: https://money.com/student-loan-forgiveness-affects-credit-scores/ type: Article source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Why Student Loan Forgiveness Could Hurt Your Credit Score](https://img.money.com/2022/09/News-Student-Loan-Forgiveness-Affect-Credit-Score.jpg?quality=85&w=1012&h=569&crop=1) * * * Presented by: ![](https://s3.consumersadvocate.org/prd/image/image/24726/a04f32fc-718d-4776-8282-2902bb7fcd4a.png) Lexington Law Firm has represented over 10.9 million people since 2004. Start repairing your credit today! [Go to LexingtonLaw.com](https://money.com/pr/df7c25b99b36?ap_referrer=%2Fstudent-loan-forgiveness-affects-credit-scores%2F) The Biden Administration’s new student forgiveness plan promises relief for about 30 million borrowers. While this is obviously great news for borrowers, changes to their student loans could also mean a change — quite possibly a temporary decrease — to their [credit scores](https://money.com/what-is-a-credit-score/). The impact is likely to be minor for most people, but it will depend on the individual situation. Here's everything you need to know. ## Your credit mix will change This second iteration of the forgiveness plan, while less ambitious than the first, could still wipe out debt for millions, and could forgive balances owed by those who have been paying for loans for 20 years or more. If you're one of those borrowers, you might see your credit score fall a little bit — at least in the short term and especially if you don’t have other kinds of debt. That's because student loans contribute to what's known as your credit mix. Your credit mix refers to the different types of loans you have, from revolving debt like [credit cards](https://money.com/best-credit-cards/) to installment debt like [student loans,](https://money.com/student-loans/) [car loans](https://money.com/get-a-car-loan/) and [mortgages](https://money.com/best-mortgage-lenders/). Lenders like to see a variety of credit types, and eliminating one type from your profile could have a negative impact on your score. Your credit mix only accounts for [10% of your FICO score,](https://www.myfico.com/credit-education/credit-scores/credit-mix) which is [one type of credit score](https://money.com/fico-vantagescore-whats-the-difference/) that lenders use to assess your creditworthiness (VantageScore is another major score lenders use). Any drop in your score due to a change in your credit mix should be minimal and probably won't make or break you when it comes to securing new loans down the line. The likelihood of a slight dip in your credit score is worth keeping in mind, however, if you're planning to finance a major purchase like a house or a car in the immediate future. ## Your credit history could get shorter The other element that might lower your score is a change in the average age of your credit accounts. Student loans are often one of the oldest loans Americans have, since most people take them out when they're still teenagers. Closing those longstanding loans could be bad for your credit score since lenders tend to prefer borrowers with longer credit histories. The length of your credit history accounts for [15% of your FICO score](https://www.myfico.com/credit-education/credit-scores/length-of-credit-history#:~:text=When%20it%20comes%20to%20length,credit%20accounts%20have%20been%20open.). The good news is that as long as you keep making your other loan payments on time, your credit score can rebound relatively quickly, and in all likelihood the temporary hit to your score won't outweigh the benefits of eliminating the debt. ## Even small oversights can lower your credit and block personal, mortgage, and auto loans. ### Since 2004, Lexington Law Firm clients have seen over 50 million collections removed from their credit reports. Why wait? Click below to get started on yours today! [Get Started](https://money.com/pr/y10ca818a23a?ap_referrer=%2Fstudent-loan-forgiveness-affects-credit-scores%2F) Lexington Law Firm services are unavailable in Oregon. ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/student-loan-forgiveness-affects-credit-scores/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Personal Finance", "item": "https://money.com/personal-finance/" }, { "@type": "ListItem", "position": 3, "name": "Student Loan Debt", "item": "https://money.com/student-loan-debt/" }, { "@type": "ListItem", "position": 4, "name": "Why Student Loan Forgiveness Could Hurt Your Credit Score" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/student-loan-forgiveness-affects-credit-scores/#webpage", "url": "https://money.com/student-loan-forgiveness-affects-credit-scores/", "name": "Why Student Loan Forgiveness Could Hurt Your Credit Score", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2024-07-03T14:52:34.000Z", "mainEntity": { "@id": "https://money.com/student-loan-forgiveness-affects-credit-scores/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/student-loan-forgiveness-affects-credit-scores/#breadcrumb" }, "dateModified": "2024-07-03T15:45:21.000Z" }, { "@type": "Article", "headline": "Why Student Loan Forgiveness Could Hurt Your Credit Score", "articleSection": "Personal Finance", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2022/09/News-Student-Loan-Forgiveness-Affect-Credit-Score.jpg?quality=85", "width": 2880, "height": 1920 } ], "author": [ { "@type": "Person", "name": "Sarah Hansen", "url": "https://money.com/author/sarah-hansen/", "@id": "https://money.com/author/sarah-hansen/#author", "description": "Sarah Hansen is a senior writer at Money covering all things personal finance. 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