After years of federal student loan relief, millions of borrowers are now facing a new reality: repayment is back. And for many, it’s wreaking havoc on their credit.

More than 1 in 5 borrowers have already fallen behind on their student loans since payments resumed in late 2023. After years of stability, the national average credit score is actually dropping, marking the first major decline in over a decade. It’s a clear signal: the aftershocks of paused payments are loud and personal.

At Hatch, we believe credit reports should be fair, accurate, and a full reflection of who you are, not just the hard moments you’ve endured. Here’s what you need to know, and how we can help.

The Spike in Delinquencies. What’s Happening?

After the pandemic-era payment pause, millions of Americans weren’t ready to restart monthly student loan payments. Between rising costs of living, confusing loan servicing transitions, and lack of clear communication, it’s no surprise that delinquencies are spiking.

This moment highlights a key truth: credit reports don’t always capture the full story. And when millions of people are struggling through the same broken system, it’s time to rethink how we measure “financial health.”

The Hit to Credit Scores

FICO scores, which most lenders use, weigh payment history as the single most important factor, making up 35% of your total score. When student loans go unpaid, they often appear as 30-, 60-, or even 90-day late marks, hammering your credit. We’ve seen drops as dramatic as 170 points after just one missed payment.

Millions are already feeling it. 2.7 million borrowers have missed payments since the restart, and we’ve already seen score drops as big as 170 points from just one late student loan payment.

And it doesn’t stop at numbers. Bad credit can slam the door on renting an apartment, buying a car, even getting a job.

At Hatch, we help our people fight back: challenging negative items that are inaccurate, unfair, or unverified. Life happens and your credit report should reflect your resilience, not just your setbacks.

Who’s Getting Hit Hardest?

First-time borrowers and younger adults are feeling the impact the most. With thinner credit files and shorter credit histories, they have fewer positive accounts to offset the damage of a missed student loan payment.

One missed payment? on a thin file? It can feel catastrophic.

That’s why Hatch is committed to educating and empowering borrowers early in their credit journeys to take ownership of their reports and fight for fairness.

Why This Isn’t Just About Money

The impact of student loan delinquency goes far beyond financial statements. Borrowers report feeling overwhelmed, ashamed, and isolated when faced with dropping credit scores.

And the consequences aren’t just emotional: bad credit can mean getting denied for a job, paying higher insurance premiums, struggling to rent an apartment, or losing access to basic financial tools like credit cards.

At Hatch, we stand by the belief that you are more than a score. We’re here to restore dignity to your financial story.

What Borrowers Can Do

If you’re feeling overwhelmed, you’re not alone — and you have options.

• Review your credit reports to see what’s being reported today
• Explore income-driven repayment plans to lower your monthly payment
• Communicate proactively with your loan servicer about hardship options
• Work with Hatch to get a grasp of your credit today and to challenge the negative things hurting your score

If you’ve fallen behind and your credit report isn’t telling the full story we’re here to fight for you.

Bonus Insight: How Scoring Models Handle Late Payments Differently

Not all credit scores weigh late payments the same way. FICO treats all late payments equally harshly, while newer VantageScore models weigh mortgage delinquencies more heavily than other types. Either way, a student loan delinquency can severely hurt your ability to access affordable credit.

That’s why Hatch embraces a “More Than Accuracy” philosophy: even if a negative mark is “accurate,” it doesn’t always mean it’s fair — and we work to help ensure your report reflects the truth of your journey.

You’re More Than a Score.

This is just a chapter, not your whole story. A temporary dip in your credit does not define you. With the right tools, the right mindset, and the right people in your corner, you can rebuild stronger than ever.We’re here to help. Let’s get started.