How Long Can a Missed Student Loan Payment Hurt My Credit?

Student loan debt continues to rise nationwide. Some students or former students cannot afford to make basic student loan payments and missing a payment can damage a person’s credit. The question for this blog is, “For how long will a missed student loan payment hurt my credit?”

Types of Student Loans and Their Effect on Your Credit

The answer to this question depends on the type of student loans that you have. The following are examples of common student loans:

  • Private Student Loans

These loans will stay on your credit report for seven years from the time of your late payment, just like other negative events. This means you are clear from your student loan misstep at the end of that time. Most federal loans will follow this 7-year cycle.

  • Perkins Loans

This loan is an exception among federal loans in that it does not follow the 7-year cycle of private student loans. This loan will stay on your credit until it is completely paid off, regardless of how long it takes. This loan is different because it is a need-based loan that is given out by colleges.

Lenders are required to report any past due payments or defaulted (payment 270 days late or later) loan payment. Therefore, if you do miss a payment, then it will likely appear on your credit.

Ways You Can Avoid Missing a Student Loan Payment

The following are some solutions to protecting your credit if you have student loans:

  • Income-Based Repayment

If you are unable to make payments because you make too little and your monthly payment is too high, then there may be a solution for you. Many repayment plans will allow for an income-based repayment plan. While these payments may be so low that they do little to remove your total debt, they do allow you to make the payment and keep a missed payment off your credit score.

  • Rehabilitation

If you default on your loans, then you may be able to rehabilitate your student loan. Once accomplished, the default will be removed from your credit score.

  • Consolidation

If you have more than one student loan, then you can consolidate them into one simple repayment plan. This will not remove any prior late payments from your credit report, however.

You can also try building your credit as soon as your take a credit hit from a late payment. If you have a credit card, then you increase your score as long as you make these payments on time.

An experienced bankruptcy attorney may have many more options for you if you feel that your debt has left you financially struggling.

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[Did You Know? The average student loan monthly payment is $242, according to the Brooking Institution.]

Law Firm of Kevin D. Judd – Maryland and Washington DC bankruptcy attorney