Graduates with a pre-1998 student loan could face a black mark on their credit rating if they default.

The Student Loans Company (SLC) has announced with effect from 15 April, missing payments on loans taken out before 1998 will be reported to credit rating companies.

Graduates struggling to pay back student loans will now find their credit rating being affected if they default on a student loan payment.

Before 15 April, missing payments would not have been reported to credit rating agencies such as Experian. SLC now has the right to alert credit rating agencies when somebody defaults on a payment.

In an announcement made on its website, the SLC said that it was introducing this new system “to recover outstanding arrears from customers with pre-1998 (mortgage-style) loans.”

Defaulters will be alerted by letter when they miss a payment, requesting that they contact the SLC. They will be given 28 days to get in touch and discuss options available to them. Customers who have not deferred within this time will be registered with UK Credit Reference Agencies.

The impact of this decision could be great for some graduates struggling in the current economic climate. A black mark on a credit rating can make it difficult to take out loans as well as interest rates potentially being higher for those marked.

In light of the credit crunch, lenders are taking no risks and prefer to award credit to people with spotless credit ratings.

In the statement, the SLC said: “Customers who engage with Student Loans Company and make suitable arrangements to repay or to defer repayments will not face court action for as long as they keep to their agreed repayment plan.”

Graduates earning less than £25,936 can apply for deferment.

Loans taken out after 1998 are not affected by the new system as payments are taken directly out of payslips.