As the cost of higher education continues to increase, many graduating seniors have been leaving college with a lot of student debt. This debt can have an impact on your credit in many ways.

Understanding the ways a student loan affects your credit can help you avoid having to dip into your emergency fund to cover high credit payments if your score is damaged.

Pay Student Loans On Time – Making your student loan payments on time is extremely important, as missing a payment will hurt your credit score. You shouldn’t treat your federal loans any different than your private ones. Missing payments on both of them will negatively affect your score in the same way.

Student Loans Are Reported As Installment Loans – In most cases, student loans are reported to credit agencies as installment loans. This means that repayment is made in fixed monthly amounts. For this reason, missing a payment on student debt typically hurts your score less than if you were to forget to pay your credit card. This means that if you are faced between paying one or the other, it may be more beneficial for your score to make the credit card payment.

Deferred Loans Still Affect Your Credit – Although your student loans have been deferred, they are still reported to credit agencies. The status of these loans are not viewed as negative or positive, but the balance will still be reported. This will increase the balance of debt you have on your report, which could hurt your ability to take out other loans in the future.

Never Default – Defaulting on your student loans should be avoided at all costs. This can hurt your credit score for up to seven years after your loan is paid in full. If you default, you may be hounded for payments and could face legal action. Your lender may also take money from your wages and tax refunds to cover the repayment of the loan. Even if you can’t cover the full monthly payment, you should call your lender and see if you can switch to a new payment plan that can reduce the amount you owe.