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Yet Another Drawback to Student Loans

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Taking out loans to fund an education could make it harder to get a credit card than it would be for a consumer with a personal loan from a bank, according analyses of recent data.

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That's because consumers with student loans are statistically more likely to default, according to VantageScore, a company that gathers and analyzes data from the three major credit scoring agencies.

Those with student debt have a 19 percent chance of defaulting on an account, according to VantageScore. In contrast, consumers paying off personal loans issued by banks and credit unions have about a 14 percent likelihood of default, according to the company, which doesn't include payday loans in that category.

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But by using non-traditional data sources to measure credit worthiness, like rent and bill payments, some consumers could actually have better access to credit than they would using the traditional credit scoring methods used by agencies Experian, Equifax and TransUnion.

Large-scale landlords, utility companies and phone companies can provide consumer payment data to the agencies if a consumer opts to disclose that information to the agencies, according to VantageScore. But only a fraction of credit files contains this type of non-traditional data, the company said.

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"When the data is available and the bureaus put it into the file, we'll use it," said Sarah Davies, senior vice president of analytics at VantageScore.

As many as 35 million consumers traditionally considered unscorable could obtain credit scores, giving lenders a better idea of those consumers' credit risk and potentially allow better access to credit cards, auto loans and other sources of credit, VantageScore said.

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