Cora Lewis and Adriana Morga
NEW YORK (AP) – Millions of Americans are seeing their credit scores fall as the US government resumes with missed student loan payments for debt collection. However, there are things you can do to help rebound your score.
Courtney Alev, a consumer advocate at Credit Karma, said it is understandable that people missed payments due to the mixed message about student loans.
“We’re truly a huge moment of empathy for consumers,” she said. “But now it’s important to have a plan.”
The U.S. Department of Education suspended federal student loan payments in March 2020, providing borrowers relief during the economic turmoil of the coronavirus pandemic.
Payments were technically resumed in 2023, but the Biden administration provided a one-year grace period that ended in October 2024. Last month, the Trump administration resumed its unpaid student loan collection process and planned to grab wage and tax refunds if the loan continues to fall behind.
According to the Federal Reserve Bank of New York, about one in four people with federal student loans were more than 90 days behind in payments at the end of March.
This is what you should keep in mind:
How to calculate your credit score
A credit score is an formula that helps lenders determine your chances of repaying the loan. Your credit score is based on your payment history and credit usage and the range of 300-850.
The three major credit bureaus, Experian, Equifax, and Transunion, each have their own model for calculating credit scores.
Factors that are frequently used to calculate your credit score are:
– Invoice payment history
– Credit history length
– Current unpaid debt
– How many credits are available (also known as credit usage)
– New credit requests
– If you send debts to collection, foreclosure or bankruptcy
How to check your credit score
Using each of the three credit departments, you can check your credit score for free at least once a year, and many banks also offer this service.
Other companies such as Nerdwallet, Credit Karma and Wallethub also offer this service.
How to know if your score is good
A score above 670 is considered “good.” If your credit score is above 750, it is considered “great.”
“Fair” credit scores range from 580-669, with scores below 580 being considered “poor.”
How to improve your credit score if your credit score drops
According to the Federal Reserve Bank of New York, 2.2 million student loan recipients fell 100 points in scores, with another 1 million dropping over 150 points in the first three months of 2025. The authors of this study reported these changes to the credit department as they were attributable to delinquency, or non-payment for more than 90 days.
To avoid these results or improve your score, the easiest steps include paying at least a monthly minimum payment and setting up automatic payments to avoid delays in payments.
Aleph says it’s worth getting into the habit of checking your scores regularly. This way you won’t be surprised by the changes and you can challenge errors and negative dips.
“It’s important to keep an eye on mistakes that need to be argued,” she said. “If you miss one payment or miss the first payment, you can often call and ask for forgiveness for a solid history of payments.”
Many borrowers reported that they had never received a faculty notice from the Ministry of Education, despite having been notified at least three weeks prior. Regularly monitoring your credit score means you can catch changes before they’re too late to fix key hits.
Other ways to improve your score
Maintaining stable, low credit usage, known as credit usage, is another easy way to improve your score, Alev said.
“It’s kind of a confused term, but the use of trust is important,” she said. “This is basically the percentage of credits available that you’re using now. If you have a credit limit of $10,000 per month and you’re using $2,000, that’s 20% credit usage. The rule of thumb to remember is to keep it below 30%. The impact of your score will accelerate.”
In most cases, checking your credit score is not painful
When you check your credit score, your credit score will not drop unless you have done a “hard survey.” This is only done when you request a line of credit.
Just let us know your current score and don’t affect your score.
When applying for a line of credit, such as a mortgage or car loan, the lender will appear in the report and make “hard enquiries” that could affect your credit.
The Associated Press is supported by the Charles Schwab Foundation for education and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.
Original issue: June 19, 2025, 12:14pm EDT
