Author: Rachel Slifka / Source: Wise Bread
Many factors can impact your credit score, but is education one of them?
In short, no. Education does not directly affect your credit score. Whether you have a Ph.D or are a high school dropout, credit reporting agencies couldn’t care less. No matter your level of education, your credit score will remain unaffected.
On the flip side, your credit score is directly affected by factors that may relate to you if you used student loans to fund your education. And your credit score is just one factor that constitutes your creditworthiness. What do we mean by creditworthiness? As defined by Investopedia, creditworthiness is “a valuation performed by lenders that determines the possibility a borrower may default on his or her debt obligations. It considers factors such as repayment history and credit score.”
While your level of education may not directly affect your credit score, it can affect your creditworthiness. Here’s how.
Debt-to-income ratio
If you borrowed money to finance your education, you could have a higher debt-to-income ratio. A high debt-to-income ratio means that you owe a high percentage of your income to debt. This can affect your creditworthiness.
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