Skipping payments or defaulting on a student loan can have serious and lasting effects on your credit. When a delinquency or default notation appears on your credit report you may have more trouble with basic financial tasks such as:
- getting a mortgage, car loan, or credit cards
- renting an apartment
- maintaining favorable interest rates on your existing loans or credit cards
- opening bank accounts
- obtaining insurance policies
- getting a cell phone contract, or
- getting a job.
Most negative information is removed from your credit report after seven years, but student loan defaults may remain on your record much longer. Defaults for a federal student loan may be reported for seven years after the most recent of the following dates:
- when it's paid off
- when it's first reported, or
- if you rehabilitated the loan, when you re-default on it.
(See 20 U.S.C. §§ 1080a(f).)
If you default on a federal Perkins loan, the default can remain on your credit record until you pay the loan in full. (See 20 U.S.C. § 1087cc(c)(3).)
The consequences of default go well beyond damage to your credit report. To learn more, see What Happens If I Default on My Student Loans?
If your loans are already in default and you're looking for solutions, see How to Get Out of Student Loan Default.