Student Loans: Can Your Credit Recover From Late Payments?

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The federally mandated forbearance on student loans will expire on May 1, 2022, meaning millions of borrowers will soon be required to resume monthly payments. Because student loans are a form of debt, your student loan amount and payment history will go on your credit report. A series of late payments on your student loan can cause your credit score to drop significantly.

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“Late payments can cause your credit score to drop by 50 to 100 points,” Mark Kantrowitz, a higher education expert, explained to NextAdvisor. Most lenders extend a grace period to borrowers in terms of making a payment without a penalty, but you’re still considered delinquent if your student loan payment is even one day late.

“Defaulting on your student loans, which occurs after a 120-day delinquency on private student loans and 270 to 360 days for federal student loans, can have a bigger impact on your credit score.”

However, Kasasa noted that even if a delinquency is added to your credit report, you can make a case to have it removed. You’ll need to provide your lender with an explanatory letter and documents proving the error, or outlining another valid reason. You may have better luck if you’ve been making payments on time, take responsibility for the delinquency and you’re polite and honest, Kasasa reported.

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If you cannot get the delinquency removed, then it will remain on your credit report for up to seven years after the first missed payment that led to the status, per Experian.

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“However, recent activity has a bigger impact on your credit score than older activity,” Kantrowitz adds. “So there should be an improvement in your credit score even within a few months of bringing the account current and resuming payments.”

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About the Author

Josephine Nesbit is a freelance writer specializing in real estate and personal finance. She grew up in New England but is now based out of Ohio where she attended The Ohio State University and lives with her two toddlers and fiancé. Her work has appeared in print and online publications such as Fox Business and Scotsman Guide.
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