Deferment does not damage your credit score if you stay current on the terms
When you defer a student loan, you postpone payments without penalty — your credit report shows the loan as in deferment status, not as delinquent or in default. The key distinction: deferment is an approved pause, not a missed payment. As long as you follow the deferment agreement your loan servicer sets up, your credit score does not drop because of the deferment itself.
However, deferment does affect your loans in other ways. Interest may still accrue on unsubsidized loans, and the total amount you owe can grow even while you are not making payments. Your credit report will show the deferment status, which some lenders view differently than an active repayment account — but that is not the same as a negative mark.
Key Takeaways
- Approved deferment does not lower your credit score because it is not treated as a missed payment by credit bureaus.
- Interest continues to accrue on unsubsidized loans during deferment, increasing the total balance you owe when repayment resumes.
- If you stop making payments without requesting deferment, your loan enters default status and your credit score will drop significantly.
- Your credit report shows deferment status, which lenders can see but which does not carry the same penalty as delinquency or default.
- Subsidized loans do not accrue interest during deferment, so the balance stays the same until you resume payments.
The difference between deferment, forbearance, and default
Deferment and forbearance are both approved ways to pause payments, but they work differently. In deferment, the federal government may pay the interest on subsidized loans; on unsubsidized loans, you are responsible for the interest that accrues. Forbearance is a shorter-term pause — usually up to 12 months — and interest accrues on all loans during forbearance, regardless of subsidy type.
Default is what happens when you miss payments and do not request deferment or forbearance. After 90 days of missed payments, federal student loans enter default status. At that point, your credit score drops, the entire loan balance becomes due when ready, and the Department of Education can begin wage garnishment and tax refund offset. Default is reported to credit bureaus and stays on your credit report for seven years.
The credit impact of deferment is minimal because it is an agreement between you and your servicer. Default is a breach of that agreement, and credit bureaus treat it as a serious delinquency.
How interest accrual during deferment changes what you owe
If you have an unsubsidized federal loan or a private student loan, interest does not stop accruing during deferment — it straightforward is not due yet. When you resume payments, that accrued interest is added to your principal balance. This means your loan grows even though you made no payments.
For example, if you defer a $20,000 unsubsidized loan at 5% interest for one year, approximately $1,000 in interest accrues. When deferment ends, your balance is roughly $21,000, not $20,000. You can choose to pay the accrued interest before deferment ends to prevent capitalization — the process where unpaid interest is added to the principal — but you are not required to.
Subsidized federal loans work differently. The federal government covers the interest during deferment, so your balance does not grow. This is one reason subsidized loans are generally preferable when you are struggling to pay.
What appears on your credit report during deferment
Your credit report will show your student loan account with a status code indicating deferment. The exact code depends on your loan type and servicer, but common codes include "DF" for deferment or "DL" for deferred loan. This status is visible to lenders and credit bureaus, but it is not the same as a delinquency code.
Lenders can see that your loan is deferred, which means you are not currently making payments. Some lenders may view this as a sign of financial stress, but it does not carry the automatic penalty that a 30-day, 60-day, or 90-day delinquency does. Your payment history — the record of on-time payments before deferment — remains intact on your report.
If you are explore for a mortgage, car loan, or credit card while in deferment, the lender will see the deferment status. Whether that affects their decision depends on the lender's policy and your overall credit profile. Many lenders treat deferment as a neutral status because it is an approved arrangement, not a failure to pay.
When deferment can hurt your credit indirectly
Deferment itself does not lower your credit score, but it can affect your credit in indirect ways. Your debt-to-income ratio — the amount you owe compared to what you earn — may be calculated differently by lenders depending on whether your loan is in deferment. Some lenders count the full balance of a deferred loan toward your debt, while others may not count it at all.
If you are in deferment and your loan balance grows because of accrued interest, that larger balance could affect your debt-to-income ratio when you explore for new credit. This is not a credit score penalty, but it could affect whether a lender approves you for a mortgage or other loan.
Additionally, if deferment ends and you cannot resume payments, you may fall into delinquency. That is when your credit score drops. The deferment itself is not the problem — the missed payments after deferment ends are.
How to avoid credit damage when you need to pause payments
Request deferment or forbearance through your loan servicer before you miss a payment. You can find your servicer's contact information on your loan documents or by logging into StudentAid.gov. Most servicers allow you to request deferment online, by phone, or by mail.
When you request deferment, your servicer will review your situation and either approve or deny the request. If approved, your servicer will send you a deferment agreement that specifies the start date, end date, and any conditions. Sign and return it promptly. Once deferment is in effect, your account is protected from delinquency.
If your deferment is about to end and you still cannot pay, contact your servicer at least 30 days before the end date to request an extension or to discuss income-driven repayment plans. These plans can lower your monthly payment to as little as $0 per month if your income is low enough, and they do not require deferment.
Frequently Asked Questions
Will deferment show up on my credit report?
Yes, deferment status appears on your credit report, but it is not a negative mark. Lenders can see that your loan is deferred, meaning you are not currently making payments under an approved arrangement. This is different from a delinquency or default, which are reported as negative items.
Can I get a mortgage or car loan while my student loans are in deferment?
You may be able to, depending on the lender and your overall credit profile. Deferment does not lower your credit score, but lenders may view it as a sign of financial stress. Your debt-to-income ratio and credit history matter more than deferment status alone. Contact lenders directly to ask how they treat deferred loans.
What happens to my credit score when deferment ends?
Your credit score does not change when deferment ends, as long as you resume payments on time. If you cannot pay when deferment ends and you do not request an extension or alternative arrangement, your loan enters delinquency and your credit score will drop.
Is deferment better for my credit than forbearance?
Both deferment and forbearance protect your credit score equally — neither causes a negative mark if you follow the terms. The main difference is that interest accrual on subsidized loans stops during deferment but continues during forbearance. For credit purposes, they are equivalent.
If I defer my loan, will the interest stop accruing?
Interest stops accruing on subsidized federal loans during deferment, but it continues on unsubsidized federal loans and private loans. When deferment ends, accrued interest on unsubsidized loans is added to your balance unless you pay it separately.