CAPE CORAL, Fla. — For millions of Americans, it took a 100-point drop in their credit score to realize their old student loans were out of forbearance.
Sarasota resident Molly Byrd and her new husband have to put their search for their perfect Cape Coral home on hold indefinitely thanks to her credit score.
"With a 49 point drop, it literally made my heart sink because you really have to be on your p's and q's when you're in the process of looking for any big purchases at all, creditors are always looking at all of the smaller details," Byrd said.
Byrd only discovered her student loans had exited forbearance when she noticed the sudden drop in her credit score. Her payments had become delinquent, and when reported 90 days later, her credit was severely impacted.
And shes not the only one, according to Cape Coral Credit connoisseur Ashley Deal, owner of Cape Credit Repair. She told FOX 4 senior reporter Emily Young, that 30% of her clients in Southwest Florida are experiencing the same problem. Nationwide, 2.2 million borrowers saw their credit scores drop by 100 points after the Department of Education resumed reporting loan payments to credit bureaus in October.
"You can be late the first 30 days, 60 days and nothing will be reported to your credit report, so a lot of people got hit with their first 90-day late payment this past February," Deal said.
These credit score drops are particularly severe because of how student loans are structured. Most borrowers have 10 to 20 loans for the same school, resulting in multiple 90-day late payment reports across several different accounts.
"It can essentially disqualify them from getting mortgages, getting credit cards, if they were in the process of closing on a house, that's completely done, it's an afterthought now," Deal said.
There is some relief available for Florida residents affected by recent natural disasters. Provisions exist for borrowers impacted by hurricanes like Helene or Milton. Borrowers don't need to show proof of damage but must provide evidence they were living in an affected area during the disaster.
"The 90-day late payments aren't reported until February. Well, hurricane season is October, so you should automatically be placed in a hurricane forbearance, which pauses your liability for payments at that time," Deal said.
However, this natural disaster forbearance only provides an additional 90 days of relief.
If you weren't automatically placed in natural disaster forbearance, Deal recommends calling your creditors immediately. You'll need to provide your ZIP code, and this action can buy you an extra 90 days before your credit is reported and nullify any prior delinquencies.
Deal emphasizes that this situation will only worsen the longer borrowers ignore it.
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