Can student loan debt ruin your credit report?

 

If you skip payments or default on a student loan, you can seriously damage your credit.

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Skipping payments or defaulting on a student loan can have serious and lasting effects on your credit. When a delinquency or default notation appears on your credit report you may have more trouble with basic financial tasks such as:

  • getting a mortgage, car loan, or credit cards
  • renting an apartment
  • maintaining favorable interest rates on your existing loans or credit cards
  • opening bank accounts
  • obtaining insurance policies
  • getting a cell phone contract, or
  • getting a job.

Most negative information is removed from your credit report after seven years, but student loan defaults may remain on your record much longer. Defaults for a federal student loan may be reported for seven years after the most recent of the following dates:

  • when it's paid off
  • when it's first reported, or
  • if you rehabilitated the loan, when you re-default on it.

(See 20 U.S.C. §§ 1080a(f).)

If you default on a federal Perkins loan, the default can remain on your credit record until you pay the loan in full. (See 20 U.S.C. § 1087cc(c)(3).)

The consequences of default go well beyond damage to your credit report. To learn more, see What Happens If I Default on My Student Loans?

If your loans are already in default and you're looking for solutions, see How to Get Out of Student Loan Default.


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Jurisdictional relevance: US

Legal Consumer - Fairborn, OHLaw. The content of this article pertains to all US states and counties.