There are couple of interesting points in this article that I think really highlight the need for more financial education amongst the general populace. Knowing your credit score, and what items you have on your credit report that can impact your credit score, is crucial.
With all of the tools we have out there now, it should be impossible for borrowers not to know if a missed payment (or several) is currently impacting their score. Not only are there several free ways to monitor your credit score, but just about every credit card offers this service now. Additionally, more and more banks are also offering this service with their regular checking accounts.
Also, a good rule of thumb is to never apply for a credit product without knowing what your credit report looks like ahead of time.
I’m not trying to blame the people in this article, and there certainly was a lot of confusion around student loans post-pandemic. However, it further highlights how incredibly important it is for people to understand credit and debt. We have a long way to go in getting the general public caught up on how our financial system works.
Additionally, the article highlights the larger economic impact this could have. Especially as our economy (for better or worse) has become more dependent on debt.
“About 43% of borrowers who owe payments on federal student loans haven’t resumed making them, according to an analysis of government data by VantageScore, a credit-score provider. That puts more than nine million people at risk of a serious credit-score drop, with two million of those on track to fall into subprime status.”
“The setbacks could have ripple effects throughout the economy, putting homeownership or a new car further out of reach for late-payers, who are largely ages 25 to 50. Lower scores can also mean lower credit-card limits and higher rates, which could be a drag on consumer spending, a crucial engine of the U.S. economy.”
#credit #creditscore #studenloans #delinquency #mortgages
