How Much Will My Credit Score Improve Once My Student Loans Are Out of Default?

About 7 percent of all student loans were in default in 2008, according to the Department of Education. You must pay student loans in almost any circumstance; defaulting on student loans damages the student's credit and it is nearly impossible to wipe them out in bankruptcy. Once you become current on your student loans expect a year or longer triage to get those points back.

Identification

Your score starts improving immediately after catching up on your student loan payments, but not by a whole lot the first month. Missed payments stay on your report for seven years and are most important during their first two years, after which they become far less of a drag on your score. Assuming you do not miss any more payments on the student loan account or any other accounts, you can probably recover most of the lost points in a year or two.

How Late Were You?

The longer your student loan delinquency, the more time it takes to recover from it. Missing a payment by 90 days or more can take up to 135 points off of your score and less for inferior scores, according to CNN. Also, once you get past 90 days late, lenders tend to put the delinquency on par with a bankruptcy and other seriously negative items, because borrowers are far less likely to pay a debt after 90 days.

Considerations

In 2008, the odd missed payment became far less derogatory for borrowers with the release of the new FICO 08 software, according to Bankrate. This only goes for 30-day missed payments. If you frequently miss payments under the 08 model, you will lose many more points than lenders that use older versions of the FICO scoring software.

Tip

Call your lender to discuss possible options when it looks like you might default on your student loan. Federal student loans, for example, automatically defer payments when you meet certain criteria, such as unemployment and other economic hardships. The government will even pay for interest on subsidized loans during deferment or forbearance. While private lenders do not have to agree to any modified payment plan, they often do if it increases their chances of repayment.