WASHINGTON — A warning for student loan borrowers. Those pricey payments aren’t just hurting short-term budgets — they’re also negatively impacting millions of Americans’ credit scores.
A new report shows that the credit scores of a million people dropped by 150 points or more earlier this year. Another 2.2 million people saw their scores drop by 100 points.
The number of people affected is growing quickly because student loan repayments were paused for several years during the pandemic. Now that they’re back, experts say you need to prioritize paying on time every month. A bill that’s overdue by 30 days could lower your credit score.
Ted Rossman is a Senior Industry Analyst for Bankrate.
“Even if you had great credit beforehand, this could make it a lot more expensive and more difficult to borrow,” Rossman said. “That could affect your ability to buy a home or even rent an apartment, buy a car, get a credit card. There’s really far-reaching implications here.”
Late payments can also impact your credit score for up to seven years. Payment history is the number one factor in how high your credit score is.
What should you do if you’re concerned about making payments on time? Take action and do it soon. The expert we talked to says the longer you wait, the more issues you could cause yourself. Also, consider talking to non-profit credit counseling agencies to get yourself on track.
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