How Does A Defaulted Student Loan Payment Impact Your Credit Score?

Tuesday, Dec 11, 18

I recently received this question from a recent college graduate. With over 20 million consumers owing more than a combined Trillion dollars ($1,000,000,000,000 if my math is correct) this question comes up a good bit.

Any missed student loan payment falls into one of two credit scoring categories. If the defaulted payment is 60 days late or less, it is considered minor credit delinquency. If the defaulted payment is 90 days late or more, it is considered major credit delinquency. It’s important to understand any level of delinquency most often causes havoc to an otherwise good credit score.

If you find yourself struggling with student loan payments, immediately call your servicer and see if they offer any solutions to help. Many federal student loan programs offer income-based payment options. Many unemployed or underemployed consumers have dramatically lowered their monthly federal student loan payments by entering the income-based program. I recently spoke to a consumer who owed around $50,000 in federal loans who qualified for the income-based program with AES. By her taking action, she was able to lower her monthly payment to $25 per month, saving her hundreds of dollars each month. Keep in mind the income-based payment will increase or decrease yearly based on your income.

Try your best to keep up with your payments. By failing to make timely payments your credit score may suffer. Lower credit scores may prevent you from buying a home or automobile in the future and/or subject you to higher interest rates.

About the Author

Credit Reporting / Scoring Expert, Chris McConville is the President of Credit Education at and founder of where he works as an Expert Credit Witness in both Federal and State Court. With working in the credit and mortgage fields since 1991, he’s dedicated to sharing his knowledge to educate consumers.

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