The resumption of student loan payments has begun to adversely affect American borrowers' credit scores, with millions seeing significant drops. After the federal pause during the pandemic, missed payments are now being reported to credit bureaus, resulting in declines comparable to personal bankruptcy. With high rates of delinquency reported, individuals face increased difficulties obtaining financing for essential needs like housing and vehicles. As pressures from inflation and layoffs mount, the impact of these credit score changes could lead to dire financial consequences for affected borrowers.
"A lower credit score makes it harder or more expensive to obtain car loans, mortgages, credit cards, auto insurance and other financial services at a time when inflation, high interest rates, and layoffs have strained the resources of some consumers."
"The Federal Reserve Bank of New York reported that in the first three months of 2025, 2.2 million student loan recipients saw their scores drop by 100 points, and an additional 1 million had drops of 150 points or more."
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