Federal student loan bills have recently resumed after a pause of more than three years. This change in financial responsibility can have an impact on your credit, making it crucial to carefully monitor your credit during this time. Failing to make timely payments on your debts, including student loans, can significantly damage your credit score. With payment history accounting for 35% of your score according to FICO, even missing a single payment can cause your credit score to drop by 50 to 100 points or more, as suggested by higher education expert Mark Kantrowitz.

Before the resumption of federal student loan bills in October, the Biden administration announced the implementation of a 12-month “on-ramp” to repayment. This period aims to shield borrowers from the consequences of late or missed payments. As a result, borrowers who aren’t making payments during this relief period, set to expire on September 30, 2024, should not see negative marks related to their student loans on their credit reports. The Education Department has also reminded credit reporting and credit scoring companies that borrowers’ current inactivity is not necessarily indicative of an inability or unwillingness to make payments. However, nonpayment will likely be reported as an “authorized forbearance,” meaning it neither harms nor benefits the borrower’s credit.

Your Role in Maintaining Good Credit

Although negative information is not reported during the 12-month on-ramp period, positive information should be included on your credit report. Therefore, if you can afford to make payments, it is advisable to do so. Ted Rossman, a senior industry analyst at Bankrate, emphasizes that borrowers should make all of their required payments on time to improve their credit. Consistent, timely payments each month eventually lead to a better credit score. Therefore, it is crucial for student loan borrowers to carefully evaluate their financial situation and make informed decisions regarding their payments.

Regularly checking your credit reports is a vital aspect of maintaining good credit. Mark Kantrowitz suggests that student loan borrowers obtain a free weekly copy of their credit report from each of the three major bureaus—Equifax, Experian, and TransUnion—through Annualcreditreport.com. By doing so, you can ensure the accuracy of the information presented. If your loan servicer mistakenly reports your loan as delinquent during the on-ramp period, it is important to bring this error to their attention promptly. Typically, creditors have 30 days to investigate your complaint. In this particular case, your student loan servicer, acting on behalf of the U.S. Department of Education, would be the responsible party. Additionally, Ted Rossman recommends filing a complaint with each credit bureau that displays incorrect information. Filing disputes can easily be done on the credit bureaus’ websites.

As federal student loan bills resume, borrowers must be diligent in monitoring the impact on their credit. Timely payments are crucial for maintaining a good credit score and should be made if financially feasible. Additionally, regularly checking credit reports helps ensure the accuracy of the information being reported. By following these guidelines and actively managing your credit, you can navigate the federal student loan repayment process while safeguarding your financial future.


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