If you’ve missed a student loan payment recently and your credit score has taken a nosedive, you’re not alone — and you’re not out of options.
Millions of borrowers just like you saw their creditworthiness drop sharply in the first quarter of 2025. According to the Federal Reserve Bank of New York, about 2.2 million student loan borrowers became newly delinquent. Over a million of them experienced credit score drops of at least 150 points, while many others lost 100 points or more.
A 100-point drop, as LendingTree’s chief credit analyst Matt Schulz put it, can be “absolutely catastrophic.” It’s not just a number — it’s something that can limit your ability to get a car, qualify for a mortgage, or even rent an apartment. And the hard truth is, recovering from that kind of drop will likely take years, not months.
Why did your score drop now?
During the pandemic, the government paused federal student loan payments to help ease the financial pressure. That pause ended in September 2023, but a “grace period”—called ”the on-ramp”—was put in place for another year to prevent late payments from damaging credit scores.
That grace period ended in October 2024. So, when the first quarter of 2025 rolled around, any missed payments finally started showing up on credit reports. Some borrowers who hadn’t missed a payment before suddenly appeared 90 days delinquent — a major red flag to credit bureaus and lenders.
What’s worse is that more than half of the newly delinquent borrowers were already in the subprime range. But many others had decent scores, above 620, meaning they previously had access to new credit, including car loans and credit cards. Now, that access may be gone or come with much higher interest rates.
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How does it affect your daily life?
A lower credit score doesn’t just impact your ability to borrow money. According to Schulz, it can raise your insurance premiums and even affect whether you’re approved for an apartment lease.
It can also block you from using helpful tools like 0% balance transfer credit cards — the very tools that might help you dig out of debt.
As Schulz put it, “There’s little in life that’s more expensive than crummy credit.” Over time, poor credit can cost you tens of thousands of dollars.
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What you can do right now
The first step toward recovery is checking your credit report for errors. Mistakes happen more than people think, and getting them removed can make a big difference fast.
Next, work on your credit utilization rate. That means trying to keep your credit card balances low compared to your total available credit. If possible, ask for a higher credit limit — but don’t use it. That can help your score improve gradually.
Yes, the road back will be slow, especially with a recent delinquency on your record. But taking action now — even small steps — can begin to repair the damage. And over time, that can make all the difference.
