With tuition on the rise, you may not be able to pay for your entire college education using savings and scholarships. Increasingly, people are using student loans to fill the gap and ensure that they can get the education necessary to succeed in life.

Curious about the relationship between your student loans and your credit score? This relationship depends on multiple factors. The good news is that student loans can help you build a credit history if you have a thin credit file. However, it’s important to be aware of your repayment terms as well as your rights and responsibilities as a borrower.

Getting a loan and your credit score

Many different loans are available to help you pay for your education, but they fall into two main categories. Federal student loans are funded by the federal government and include Direct Loans, PLUS Loans and Perkins Loans. Private loans are funded by non-government entities like banks, credit unions and even schools themselves.

While both types of loans can be used to help make college affordable, there are some pretty significant differences between federal and private student loans. When it comes to your credit score, the biggest difference is that most federal loans do not require a credit check.

As a result, federal loans may be easier to obtain for students who may not have long credit records. Federal loans also tend to offer lower interest rates than their private counterparts. This is in part because eligibility for many private loans may depend on your credit history and score.

Paying back a loan and your credit score

Once you’ve graduated, it’s time to start paying that student loan back (sigh). A big chunk of your FICO score (35 percent) is dependent upon your payment history. Making your student loan payment on time and in full every month is a great way to establish a good credit record. Defaulting on student loans has the potential to lower your credit score and make things like buying a car or qualifying for a credit card difficult.

However, student loan default can also to lead to other consequences, such as having your state and federal income tax refunds withheld (this is called a tax offset). Your wages can be garnished and applied to your debt. Student loans are also not usually dischargeable in bankruptcy.

The fact that federal loans have lower interest rates may make monthly payments more manageable. Federal loans also tend to have a wider variety of repayment options not always available for private loans. Additionally, the IRS may help you with federal loans, since interest on federal student loans may be tax deductible.

Student loans can impact the rest of your life

Student loans exist to help people get a great education and pursue their professional goals. If used responsibly, they can also help establish your credit history as a young adult. This is why they are generally considered “good debt.”

However, they’re easy to take out in the moment and can be challenging to pay back over time. Use them responsibly by taking out the minimum amount of student loans possible, at the best possible interest rate, and with the most flexibility in repayment.