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Posted in Student Loans
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Question By
ghoa

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Why did student loan deferment drop my credit score?
I've read in several places that student loan deferment is not supposed to drop credit scores, and other threads on this site confirm this but have not yet been answered. I have not missed any payments prior to the deferment, nor have had credit checks in the past 2 years, nor carry a balance on my credit cards. The deferment is literally the only change in the past several months. In fact, I have a great job and the means of paying off the loans, but was advised to keep them open to boost my credit score. The deferment was not requested by me but was automatically applied since I am now back in school part time. Any ideas on why the scores have dropped?

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I guess the question would be if a loan in deferment is considered an open loan. If it isn't considered to be an open loan while in deferment, then that may be why you experienced score decrease when the loan went into deferment. It could be comparable to closing a loan, even though it is not actually closed. Usually when you close a loan, you experience credit damage as you are losing an account. Could be what is going on, I am not sure, I need to study a little more in the area of student loans.

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