Consequences of a bad credit score

From wage garnishment to a credit score hit, a multitude of consequences can occur if a borrower doesn't repay their student loans.

Do student loans affect your credit score?

While student loans can impact your credit score, that's not necessarily a bad thing. Repaying the loan on time can strengthen your credit score, whereas paying late can hurt it. To find out more about how student loans can impact your credit score, read this article.

How to rebuild your credit score

It's easy to let your credit score slip without realizing it. Checking your credit score and getting to know what's on your credit report are the first steps to getting to the "700 club," or "good score" range, according to one financial expert.

How the credit scoring system could change

Factoring rental payments into credit scores is just one proposed change some have suggested making to today’s credit scoring system to cater the system to renters as well as homeowners.

Some argue that credit reporting promotes economic inequality in the US

Although today's credit scoring system is much more objective than, say, the credit assessment system of the 1700s, some argue there's still room for improvement, with critics saying the current system is still discriminatory. For example, while mortgage payments have long been automatically reported to credit bureaus, rent payments (the primary housing expense for most lower-income Americans) historically haven't been reported unless a payment was missed.

Privacy concerns in the credit scoring system

Because credit scores use a lot of personal information (such as whether or not someone makes credit card payments on time), some worry their privacy is being compromised in the data collection process.

See how a good VantageScore and a good FICO score can differ

While VantageScores and FICO scores both offer credit scores between 300 and 850 and consider the same core factors, they weigh those factors differently, and specific numbers can have different meanings depending on the type of score.

Most people will probably never hit a perfect 850 credit score for a variety of reasons, including the fact that younger borrowers are at a disadvantage as credit history length accounts for 15% of one's score.

More than 3 million student loan borrowers were in default at the end of 2021

More than 3 million student loan borrowers were in default at the end of 2021. While default rates have declined since pandemic-era payment pauses, failing to pay off student debt can still have serious consequences, from a low credit score to the government withholding wages.

Student debt has a widespread economic impact

Student debt is no different than the big rent or car payment that comes out of someone’s paycheck every month: Its presence affects that household’s purchasing power. Multiply that household by the 43 million Americans who had outstanding federal loan debt in September 2023, and student debt’s impact becomes considerable.

Five primary factors determine your credit score

Your credit history is used to calculate your credit score. It includes information such as how often you miss payments (on credit cards, for instance), the types of financial accounts you hold, how long you’ve held those accounts, and more.

How credit scoring works outside the US

If you move outside the US, you won’t get to take your credit score with you. Credit scoring systems work differently in other countries. In the UK, for instance, being registered to vote improves your credit score.

A 'debt trap' refers to the need for loans or credit to cover the expenses incurred from other debt

Debt traps can be caused by unforeseen expenses or inadequate savings and can be a brutal cycle to break. At the end of 2025, total household debt in the US reached $18.8T, according to data from the Federal Reserve of New York.

Before the Great Recession, lax requirements to get a mortgage resulted in mass defaults that left nearly 19 million homes vacant.

Credit limits can be lowered as well as increased

Some common reasons for someone's credit limit being lowered include missed payments, an inactive account, and more.

Why consumers could soon see the impact of buy now, pay later loans on their FICO credit scores

FICO rolled out its first-ever BNPL-specific credit scoring models in June 2025. While missed installments can now negatively impact a credit score, there's also the potential for on-time BNPL installment payments to help boost scores.

Use this mortgage calculator to estimate how much you can borrow, factoring in fundamentals such as financial standing, property cost, loan length, and more.

Borrowers were increasingly defaulting on private credit loans as of early 2026

Risks in private credit investing include the industry's lack of transparency and the ability of businesses to borrow more than a bank might allow against their debt. Some borrowers in early 2026, for instance, likely did not expect interest rates to be so high for so long, which could be contributing to an uptick in defaults.

Watch Margot Robbie explain subprime mortgages—risky loans given to homebuyers with low credit scores or no income verification.

To continue selling mortgages, agencies that determine how risky a loan is gave high ratings to homebuyers regardless of their actual risk portfolio.

In 2024, 74% of homebuyers took out a mortgage

Debt owed on mortgages made up about 70% of US consumer debt as of 2025. Mortgage collateral ensures the lender isn’t at a complete loss if the borrower defaults. Under most mortgage contracts, the property is considered collateral under the loan. This means that if a borrower doesn’t repay the loan, then the lender can seize their property.

In real estate, a larger down payment can reduce your loan amount

However, the trade-off is liquidity: Tying up too much cash in a home can reduce emergency savings and delay your purchase.

What your credit score actually means

The modern iteration of credit scores hasn’t been around for that long—it was invented just a few decades ago, in 1989. This video outlines how the credit scoring system has evolved and become more complex since then. Plus, it explains what your credit score actually means, what factors impact your score, and more. Watch it here.

What are business credit scores?

Businesses have credit scores the same way individuals do—with a few key differences. For one thing, business credit scores range from 0 to 100 instead of 300 to 850, and are based on factors such as bankruptcy and bill-paying habits.

For everyday Americans, a relatively high national debt can lead to higher interest rates on financial products such as mortgages.

Subprime lending practices, which fueled the housing bubble, surged after 2000.

Even high earners are living paycheck to paycheck

While roughly 14% of American households make $200K or more per year, many of them still don't feel rich. For instance, more than 60% of people with salaries over $300K per year still struggle with credit card debt.

The pros and cons of long-term renting

Soaring mortgage rates and inflated home prices have led more consumers to opt to rent instead of buying, becoming “forever renters.” This article weighs the costs and benefits of renting instead of buying. Benefits include flexibility, less upkeep, and potentially lower expenses, while downsides include less stability and reliance on landlords. Read this article and decide whether homeownership or renting is the choice for you.

How to check your credit score

Contrary to popular belief, checking your credit score doesn’t hurt your credit. Many credit card companies show your score when you log into their app online, but there are other ways to check it.

Credit scores seriously suffer when individuals file for bankruptcy, and there’s no easy fix

Those who file for Chapter 7 must wait 10 years before the bankruptcy is removed from their credit report. For Chapter 13, the wait time is seven years.

Payday lenders usually require borrowers to post-date a check or provide access to an electronic bank account

If borrowers can't pay back the loan, they can be subject to overdraft fees from their bank and other fees from the payday lender—further exacerbating the debt borrowers face.

People who take out payday loans often know they are a bad deal

Despite common criticism that payday lenders take advantage of uninformed borrowers, some people who take out payday loans know they are usually a bad deal, but often feel like they don't have any other options. Payday loans are often considered a symptom of poverty. (Some users may experience a paywall.)

Historically, borrowing money from other people to purchase property was common until private financing companies—primarily building and loan associations—stepped in to offer mortgages to buyers.

In some expensive US cities, a $100K salary hardly offers a comfortable living

After tax, a $100K salary leaves you between $70K and $80K, depending on where you live. The value of what's left over varies significantly from city to city, with considerations like rent and grocery costs impacting how much money you lose.

Credit card issuers determine your credit limit using your payment history, income, and more

Some credit card issuers also take your other payment obligations into account when determining your credit limit, such as the cost of your rent or alimony.

How interest rates affect homebuying

Rising interest rates impact every aspect of buying a home. This five-minute article gives a high-level overview of the relationship between the housing market and interest rates.

The Federal Reserve's decisions can impact your money

Car loans, mortgages, business investments—these and more can be drastically impacted by the adjustment of the Federal Reserve’s federal funds rate. Alternatively, savers can earn higher, low-risk yields on their savings when the Fed’s target rate is higher.

Roughly 37% of first-time US home buyers have student debt

When those people have extra money, they might wonder: Is it better to pay down my mortgage or my student loans first? This article argues that the answer depends on each loan's interest rate, among other factors.

An explanation of hard credit checks vs. soft credit checks

Some buy now, pay later services do a soft credit check rather than a hard credit check, like credit card companies would do when someone applies for a card. While hard credit checks can impact your credit score, soft pulls typically do not.

Mortgage insurance offers help to buyers who can’t afford to put down 20% up front

Buyers who need mortgage insurance end up paying more per month on top of their loan to cover the added insurance. At its core, mortgage insurance helps buyers purchase a home they can’t afford, letting them put down 20%, while protecting lenders offering potentially risky loans.

Managing too many credit cards can be costly if they have annual fees

However, canceling cards must be strategic if it becomes necessary, as it can negatively impact your credit score. Before canceling, experts suggest asking if it's possible to downgrade to a no-annual-fee version in order to keep the account open, thus preventing potential hits to your credit score.

How life looks different with a $75K household income versus $150K

"The cleanest way to describe the gap is that $75K is often about stability, while $150K can be about optionality, but only if fixed expenses do not expand to consume the raise," said one finance professor.

A third of Americans don't have the cash they need to cover a $500 emergency, according to a 2023 Federal Reserve survey.

In 2025, the US credit rating was downgraded over concerns about the debt-to-GDP ratio.

The average monthly mortgage payment in the US costs 38% more than monthly rent

A recent study showed that the price gap between renting and buying grew in 38 major US metro areas since last year. The metro areas with the smallest price gaps between renting and buying include Detroit, Philadelphia, and Cleveland.

How FICO and VantageScore weigh factors in credit history differently

VantageScores are sometimes lower than FICO scores because the algorithms that calculate the two scores weigh the factors that influence them differently. For instance, VantageScores typically weigh payment history more heavily than FICO scores.

The average US household carries $105,056 in total debt

This article breaks down the average household debt by category, including credit card debt ($6,523), personal loans ($11,274), and more.

Why Americans are drowning in credit card debt

Americans owe more than $1T to credit card companies. And with rising interest rates that prevent cardholders from paying down debt (not to mention the rising cost of living), that number is likely to keep growing. A podcast episode explains how the US got here, and what policymakers and individuals can do about it.

The salary needed to buy a home in the US

Anyone who has recently explored buying a home in the US knows it's not a cheap endeavor. The median salary for the typical American homebuyer has risen to roughly $104K, up from $88K two years ago. This data visualization breaks down the household income required to buy a median-priced home in 50 major US metro areas. Learn more here.

How VantageScore and FICO’s algorithms calculate credit scores differently

VantageScore and FICO weigh various factors that determine your credit score differently. For instance, while your payment history makes up 40% of your VantageScore, it only makes up 35% of your FICO score.