In 2013, it’s hard to attend college without taking out a loan. Add graduate school on top of that, and many students are leaving their studies with over $100,000 in loans. One of the big questions on everyone’s minds is, of course, “How does a student loan affect your credit?”

Debt to Income Ratio

A way of answering this inquiry, “How does a student loan affect your credit?” is by looking at your debt to income ratio. Let’s say that you are trying to get approved for an auto loan. You have $60,000 in student loan debt, and you are currently making $20,000 a year. The ratio could very well prevent you from taking out a loan, and you may face similar difficulties with home loans and other types of loans; but for an automobile there are special student auto loans available.

Missed Payments

Much like a credit card, you need to make your payments on time with a student loan. If you miss a payment, it could be reported to the credit agency. One missed payment in a 10 or 15 year repayment plan is probably not going to hurt you much at all; however, regularly missing payments means that your credit score is going to drop, so be sure you’re making all of those payments on time.

Revolving Debt

At any given time, you, and all other Americans with debt, have a certain amount of revolving debt. Generally, this amount refers to the amount of debt that you generally have. When you have a student loan on your record, this amount is going to be higher than if you did not. Revolving debt is another factor that lending agencies, whether for a house or a car, are going to look at when determining whether or not you are a suitable candidate.

Clearly, taking out a student loan can absolutely affect your credit in the following ways:

• Debt to income ratio
• Missed payments
• Revolving credit

Still though, this information does not mean that you should avoid taking out any student loans at all. As with all financial decisions, you must be smart about the choices that you are making. If the amount seems as though it will be too much to handle in the long run or if you plan to make some big purchases right after graduating from college, you might want to consider other ways of funding your education such as government issued or private grants and scholarships that are available.