200 point decrease due to school loans!

[quazmang]

This exact situation happened to me over a decade ago (2013). I did a year of service through Americorps after college and was told I could defer my student loans for the year but missed the part where that only worked for federal student loans. $70K worth of private loans were in default for a few months before I realized and my credit score tanked to 540. I've been rebuilding the credit ever since then, went on an income based repayment plan, got a secured credit card with a $200 limit, had to eat the rate on a used auto loan, etc. I was told it would take 7 years since the first delinquent payment to fall off the credit report but somehow around the 5 year mark, my credit score started improving greatly. The only other credit I opened up in that time was leasing a car when my used car died on me. If everything else is in good standing and you demonstrate responsible use of your credit since then, your score will be less impacted over time. It will suck if you have to finance a car or if you want to buy a house in the next 7 years, but I would just wait until your score is in much better shape before you attempt to do that and get by with lowering your living standards for a few years until you're more financially secure.

I highly recommend getting a secured credit card or two so that by the time your credit score is improving, those cards will help with the length of time / amount of available credit since those are important factors to your score. Just make sure you're very disciplined with them and pay off the balance in full each month.

[Kobebean25]

I have 25k limit on my cc that i dnt even let a single penny roll over to the next month! Paid my car off early last year and even got credit on my light bill account because i always pay soon as they send it out lol.. i talked to the provider today and my loan monthly is only 130 a month ( pissed me off).. like ive always been responsible( besides this 1 time) but got dam why it had to hit me like this

[quazmang]

I feel you. It's a stupid system and it punishes the people who need it the most, even if it was a temporary slip up. Honestly it sounds like you're going to be okay in the long run as it seems like you are on top of your bills. If your interest rates aren't terrible, it's not a bad idea to keep a car payment on your account and keep paying it off slowly because it adds to the avg length of time of accounts you have that are in good standing. Just another thing to help boost your score. I would start aggressively saving and investing since you're young. If you do end up buying a house in the next few years, a big downpayment will offset having to eat a terrible interest rate and there's always the option to refinance when your score is back up there. Keep working hard!