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Yes, student loans can affect your credit rating very much so. However, if you are a student who is still attending school, student loans do not show up on a credit report at all.

You also have a six-month grace period after you have graduated before worrying about repayment or having the loan/loans show up on your credit score. Once these periods have passed the loans are factored into your overall credit rating.

It is very important to remember that regular payments must be made to have a positive effect on your credit rating. If you are just setting up your loan now, you will be given your different repayment options to chose from. They are:

1. A graduated payment that increases with time. This type of loan usually lasts from three to ten years.
2. A standard fixed repayment that is above $50.00.
3. A conditional income payment. You loan payments would be determined each year by your previous year’s earnings.
4. If you have a large loan, you can request an extended repayment that can last from 12 to 30 years depending on the amount of your loan.

I have two sons that are 36 and 34 years old and they are both on this extended plan. I guess by their ages it is easy to figure that one out!

The type of repayment will affect your life for many years. So you should think carefully about which type of repayment is best for you and your life. I know right now it is difficult to calculate all of this, but it is easier to have a smaller repayment that you can meet and not default on and make double payments when you can.

It is very important to make regular payments on your student loan. There are serious consequences if you are not responsible in making this payment. For example, if you default on a student loan you can lose your income tax return, or suffer a 10 percent loss of your paycheck (also, if you default for a long period of time they can garnish your entire pay check.)

Also, other penalties are, you could be liable for 25 percent in late fees. Or even worse, you could have a lawsuit filed against you.

There might come a time where you have a difficulty in repaying your student loan. If this happens, you should immediately contact your lender and talk with them to explain your circumstances.

You are considered in default only if you have not made a payment, or if you have not contacted anyone (your lender) about it in 180 days, which is approximately four months.

Usually when contacting your lender that will work with you to obtain a reasonable payment plan. Remember, their goal is to get back the money that was handed out to you, and they do want it back!

Now if you make those new payments for twelve months in a row, you will then be considered to be out of default. And if you repay it successfully for a six-month period, your can even apply for another federal loan. (Only, if you really need it, please!)

Once you are out of default, more options will be opened to you regarding your loan. It’s like cleaning your slate. It is most important to remember that you cannot go into default a second time on your student loan without extreme implications, such as a lawsuit against you!