2.2M borrowers see 100+ point credit score drops
Here’s how to protect your score going forward
How to Protect Your Credit Score Now That Student Loan Payments Have Restarted
Millions of Americans are now seeing the consequences of missed student loan payments show up on their credit reports, as the federal government has resumed debt collection efforts. But there are practical steps borrowers can take to safeguard or even improve their credit scores in this new landscape.
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Why Scores Are Dropping
The Department of Education initially paused federal student loan payments in March 2020 during the pandemic. Though payments technically resumed in 2023, the Biden administration gave borrowers a one-year grace period ending in October 2024. Now, under the Trump administration, collections have officially restarted—including wage garnishment and tax refund seizures for unpaid loans.
According to the Federal Reserve Bank of New York, nearly one in four federal student loan borrowers were more than 90 days delinquent on their payments by the end of March. In early 2025 alone, 2.2 million borrowers experienced credit score drops of 100 points, while another million saw drops of 150 points or more.
How Credit Scores Work
A credit score helps lenders assess your reliability in repaying debt. Scores typically range from 300 to 850 and are calculated using:
Payment history
Length of credit history
Outstanding debts
Credit utilization (how much of your available credit you're using)
New credit inquiries
Past defaults, collections, bankruptcies, or foreclosures
The three major credit bureaus—Experian, Equifax, and TransUnion—each use slightly different models, but the fundamentals are the same.
What’s Considered a Good Score?
Good: 670 and above
Great: 750 and above
Fair: 580–669
Poor: Below 580
Falling below 580 can significantly impact your ability to secure loans, rent housing, or even land certain jobs.
How to Recover From a Drop
If your credit score has taken a hit, there are simple and effective ways to start repairing it:
Pay at least the minimum due each month.
Set up auto-pay to avoid missing future payments.
Regularly check your credit report for errors and disputes.
Ask for forgiveness if you've missed a single payment but have a solid history.
Courtney Alev, a consumer advocate at Credit Karma, emphasizes early intervention. "It’s important to monitor for mistakes you need to dispute," she says. "If it’s your first time missing a payment, you can often call and ask for forgiveness."
Many Didn’t Know Payments Had Resumed
Despite guidelines requiring notice, many borrowers say they were never told payments were restarting. Staying informed and checking your credit report regularly can help you identify and resolve issues before they escalate.
Keep Your Credit Utilization Low
Another key factor is credit usage. Alev explains: "If you have a $10,000 credit limit and use $2,000, your utilization is 20%. Keeping it below 30% helps your score improve faster."
Don’t Worry About Checking Your Score
Checking your own credit score is usually a soft inquiry and does not hurt your score. Only hard inquiries—like applying for a mortgage or car loan—impact your credit.
With the Right Actions, You Can Bounce Back
Even if your score has dropped due to missed student loan payments, there are plenty of tools and habits that can help you recover. Staying informed, making consistent payments, and keeping your credit usage low can put you back on the path to financial health.