Late Student Loan Payments Could Drop Credit Scores By 171 Points—Here’s How to Protect Yours
Learn how default payments could impact even excellent credit, plus steps to avoid taking a hit
Anyone with a student loan has likely been keeping a close eye on any new changes that could affect their repayments. The newest stressor that could be impacting millions around the country? Late payments causing credit scores to take a big hit. Keep reading to learn more about how failure to make student loan repayments could seriously impact borrowers’ credit scores moving forward, plus how to avoid this pitfall.
How many borrowers are affected by delinquencies??
New data has revealed that student loan delinquencies are at a record high, reports CNN. The Federal Reserve Bank of New York recently released its 2025 Student Loan Update, which provides information about student loan activity.
According to the data (which covers statistics through September 30, 2024), roughly 15.6% of federal loans were estimated to be overdue. This means that 9.7 million borrowers are dealing with more than $250 billion in delinquent student loan debt.
This is despite the payment pause that had been put on student loans during the pandemic. While the initial 3.5-year-long moratorium came to an end in September 2023, the Biden administration extended it for another year. The temporary suspension of collection activity meant loan defaults were not being reported to the credit bureaus.
But now that the moratorium quietly closed on January 1 of this year, according to USA Today, some borrowers’ credit scores could be taking a huge hit.
What happens to your credit score if you miss a payment?
Failure to make payments can have quite the impact on borrowers, as revealed by the latest data. The report shows that those with particularly high credit scores have the most to lose by not paying back their loans.
Here’s the average point change expected, based on credit scores before delinquency:
- Less than 620: -87
- 620-659: -143
- 660-719: -165
- 720-759: -165
- 760 or higher: -171
The majority of credit score models range anywhere from 300 to 850. Many lenders consider anything below 580 to be considered poor, with 670 to 739 seen as acceptable or low-risk. An excellent credit score usually starts at 800.
The predicted point change for delinquent student loan borrowers means that a very good credit score could quickly drop to poor.
Lenders use credit scores to assess whether to offer you anything from a mortgage to a credit card. The scores can also play a part in the interest rates and credit limits you may receive. Though credit scores can be improved, the process does take time.
Tips for protecting your credit score with student loans
If you have an outstanding loan, it’s important to make payments, especially if you stopped doing so at any time. “People need to be persistent about repaying their federal student loans,” Jack Wallace, director of governmental and lender relations at Yrefy (a company that helps delinquent borrowers) told USA Today. “You cannot ignore it anymore because it’s going to negatively impact your credit score.”
There are steps you can take if you’re struggling to make payments—and protect your score in the process:
- Switch to an income-driven repayment plan. Now that several applications have been reopened, borrowers can apply for one of these options. If accepted, you will get a fixed monthly bill to make monthly payments based on your take-home pay and family size.
- Apply for deferment when applicable. This allows you to temporarily postpone or reduce your payments, and can pause interest on some loans. Cancer treatments, economic hardships, military service and unemployment are some of the eligible categories.
- Check eligibility for forgiveness. The Public Service Loan Forgiveness program is one of the most common ways to have the remaining balance of your loan forgiven.
- Consider rehabilitating or consolidating your loans. These options help you get out of default and return your debt to a current status. This means making nine consecutive, on-time payments for rehabilitation and three for consolidation.
And if you’re struggling to make student loan payments, there is plenty more you can do, like refinancing (and we have a whole list of tips here).
How to check your credit score
Finally, experts suggest regularly checking your credit report for free (on websites like AnnualCreditReport.com). This helps you ensure that your current student loan balance and payment status are accurate so you aren’t seeing an unfair drop.
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