Student loan debt is a growing issue in the United States, with 44 million Americans owing a collective total of $1.5 trillion. Missing a student loan payment can have a major impact on your credit score, making it more difficult to access financing in the future. In this article, we’ll explore what a missed student loan payment is, how it affects your credit score, how long the impact lasts, and what you can do to improve your credit.
What Is a Missed Student Loan Payment?
A missed student loan payment occurs when you fail to make the minimum required payment on your student loan in a given month. This can happen for a variety of reasons, such as forgetting to make the payment, not having enough money in the bank, or simply being unable to make the payment. Regardless of the reason, a missed student loan payment will have a negative impact on your credit.
How Does It Affect Your Credit Score?
When you miss a student loan payment, your credit score can drop significantly. This is because lenders use your credit score to determine your creditworthiness, and a missed payment can indicate that you are not a reliable borrower. Additionally, your credit number can be further impacted if the missed payment is reported to the major credit bureaus, such as Experian, TransUnion, and Equifax. Check your score for free at CreditKarma.
How Long Does the Impact Last?
The length of time that a missed student loan payment will affect your credit depends on several factors, including the amount of the missed payment and the number of payments you have missed. Generally, the impact of a single missed payment will last for up to two years, while multiple missed payments can remain on your credit report for up to seven years.
What Can You Do to Improve Your Credit Score?
If you have missed a student loan payment, there are several steps you can take to improve your credit score. First, make sure to make all future payments on time. Additionally, you can contact your lender to discuss any potential payment plans or loan modifications that may be available. Finally, you can also take steps to reduce your overall debt, such as making extra payments or consolidating your student loans.
Missing a student loan payment can have a significant impact on your credit score, making it more difficult to access financing in the future. However, there are steps you can take to improve your credit score, such as making all future payments on time, contacting your lender to discuss payment plans or loan modifications, and reducing your overall debt. By taking these steps, you can help ensure that your credit is not negatively impacted by a missed student loan payment.