How Falling Behind on Student Loans Impacts Your Credit and Homeownership Goals this 2025
As the homebuying season unfolds, many Americans are discovering that missed student loan payments are impacting their credit scores, potentially hindering their ability to secure mortgages.
With the resumption of federal student loan payments in late 2023, nearly 10 million borrowers are facing delinquencies in 2025, leading to significant credit score declines.
The Impact on Credit and Homeownership
A single missed student loan payment can cause a credit score to drop by over 150 points, especially for those with previously high scores.
Such declines can shift borrowers from qualifying for conventional mortgages to relying on FHA loans, which often come with higher interest rates and additional fees.
Why Are Delinquencies Increasing?
The pandemic-era pause on student loan payments led many borrowers to believe their loans were still in deferment.
The transition to new loan servicers and lack of clear communication have further contributed to the confusion.
Once a borrower is 90 days behind, the delinquency is reported to credit bureaus, exacerbating financial challenges.
Everyday expenses are through the roof. Tariffs don’t help either. Prices are up, but help’s still out there. Explore your options today!
Steps to Mitigate the Impact
-
Check Loan Status: Visit studentaid.gov to review your repayment history and ensure your contact information is current.
-
Communicate with Servicers: If you've missed payments, contact your loan servicer immediately to discuss options like forbearance or deferment.
-
Understand Repayment Plans: Explore income-driven repayment plans that can adjust your monthly payments based on income and family size.
-
Monitor Credit Reports: Regularly check your credit reports for inaccuracies and address any discrepancies promptly.
Conclusion
The resumption of student loan payments has introduced new challenges for prospective homeowners.
However, by staying informed and proactive, borrowers can navigate these obstacles and work towards achieving their homeownership goals.
-
Don’t miss out on the latest updates and insider tips that can supercharge your financial and entertainment life.
