How to improve your credit score if you’ve missed student loan payments

Article content

NEW YORK (AP) — Millions of Americans are seeing their credit scores drop now that the U.S. government has resumed referring missed student loan payments for debt collection. But there are things you can do to help your score rebound.

Article content

Courtney Alev, consumer advocate at Credit Karma, said it’s understandable that people have missed payments because of the mixed messages around student loans.

Article content

Article content

“We’re really at a moment of enormous empathy for the consumer,” she said. “But now it’s critical to make a plan.”

Article content

Article content

The U.S. Department of Education paused federal student loan payments in March 2020, offering borrowers relief during the economic chaos of the coronavirus pandemic.

Article content

Article content

Though payments technically resumed in 2023, the Biden administration provided a one-year grace period that ended in October 2024. Last month, the Trump administration restarted the collection process for outstanding student loans, with plans to seize wages and tax refunds if the loans continue to go unpaid.

Article content

According to the Federal Reserve Bank of New York, about 1 in 4 people with federal student loans were more than 90 days behind on payments at the end of March.

Article content

Here’s what you should keep in mind:

Article content

How your credit score is calculated

Article content

A credit score is a formula that helps lenders determine how likely you are to pay back a loan. Credit scores are based on your history of payments and your credit utilization and range from 300 to 850.

Article content

Experian, Equifax and TransUnion, the three main credit bureaus, each have their own model to calculate credit scores.

Article content

Factors frequently used to calculate your credit score are:

Article content

Article content

— Bill payment history

Article content

— Length of credit history

Article content

— Current unpaid debt

Article content

— How much of your available credit you’re using (also known as credit utilization)

Article content

— New credit requests

Article content

— If you have had debt sent to collection, foreclosure, or a bankruptcy

Article content

How to check your credit score

Article content

Each of the three credit bureaus allow you to check your credit score for free at least once a year, and many banks offer this service as well.

Article content

Other companies such as NerdWallet, Credit Karma and WalletHub also offer the service.

Article content

How to know if your score is good

Article content

A score of 670 or higher is considered “good.” If your credit score is over 750, that’s considered “great.”

Article content

“Fair” credit scores are in the 580-669 range, and a score below 580 is considered “poor.”

Article content

How to improve your credit score if it has dropped

Article content

In the first three months of 2025, 2.2 million student loan recipients saw their scores drop by 100 points, and an additional 1 million had drops of 150 points or more, according to the Federal Reserve Bank of New York. The study’s authors attribute those changes to loans falling into delinquency, or 90 days or more of nonpayment, which is then reported to credit bureaus.