- September 20, 2013
- Posted by: Richard Feinberg
- Category: Student Loans
If your student loan payment is stretching your finances to the max, and you are considering skipping a payment in order to regroup for the next month, think again. According to a St. Petersburg bankruptcy attorney, missed student loan payments and student loan defaults are among the worst things you can do for your credit score.
Default and Your Credit Score
A default on a student loan occurs when you have failed to make a payment for 270 days, assuming monthly payments. Once your loan has defaulted, the entire balance of the loan becomes due at once, and you lose access to all the borrower services that student loans carry, such as deferment and forbearance. Additionally, the servicer can take action such as wage garnishment or other legal action to obtain payment.
The default will be reported to credit bureaus, causing a severe hit to your credit score. But do not wait 269 days before making a payment and think you are beating the system, either. Your loan is reported as delinquent after 90 days of non-payment, and there are consequences to your credit score for missing even one payment. And if your loan has defaulted and your wages are being garnished, this still does not help your credit score, as garnished wages are not considered voluntary loan payments and thus do not count toward getting the default off your credit history!
Of course, the best course of action here is to make your student loan payments; and if you run into trouble, talk with your lender as soon as possible to ensure you do not fall into bad standing.