How damaging would it be to my credit if I stopped paying on a loan?
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I have a couple of loans (totaling around $9,000) that I don’t feel I should continue to pay because I believe I got scammed. My current credit is very good. How much will it hurt my credit if I stop paying back the loans, and for how long?
It will damage your credit very badly for a long time
Your credit will be shuttered. First, you will have late payments on your credit report. While the first 30 days late will only drop your score by around 30 points, when you hit the 90 days mark you can expect a much bigger drop.
After 180 days (6 months) of delinquency the creditor will charge-off your accounts. That will really ruin your credit for at least 2-3 years.
Your debt will be sold to collection. They will probably file lawsuits, certainly for a large debt as yours. If they win and get a judgment against you (a reasonable scenario), that judgment will continue to ruin your credit for a few more years. Not to mention they can garnish your wages, attack your bank accounts and property and much more.
What’s worse is that the better your score is in the first place, the dipper the drop will be (See why-pay-off-debts.html and how-to-pay-off-debt.html for more information).
In the end you will pay your debts, plus interest and legal fees, while ruining your credit in the process.
My advice? Forget about it. Feel and obligation are not the same. If you have an issue with the lender, take legal actions against him. But don’t just default on these loans. You only stand to loose.
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