From Yahoo Finance: 2025-06-18 10:53:00

Millions of Americans are seeing their credit scores drop as the U.S. government resumes referring missed student loan payments for debt collection. The Federal Reserve Bank of New York reports that about 1 in 4 people with federal student loans were more than 90 days behind on payments in March.

The U.S. Department of Education paused federal student loan payments in March 2020 due to the pandemic. Payments technically resumed in 2023, but the Trump administration restarted the collection process in October 2024 for outstanding loans. Factors used to calculate credit scores include bill payment history, length of credit history, current unpaid debt, credit utilization, new credit requests, and more.

A credit score ranges from 300 to 850 and is calculated based on payment history and credit utilization. Checking your score regularly is important to catch any errors or significant drops. Maintaining low credit usage can improve your score, and checking your credit score doesn’t hurt unless you’re making a hard inquiry for a line of credit.

To improve your credit score, pay at least the minimum monthly payment and set up auto-pay to avoid late payments. Regularly monitoring your score can help catch any changes early. Maintaining a low credit usage is key, as is understanding the impact of hard inquiries on your credit report.

Read more: How to improve your credit score if you’ve missed student loan payments