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Delinquent student loans can hurt your credit score significantly. But sometimes the errors aren’t your fault, or they’re repairable.
Knowing how to remove student loans from your credit report (when it’s necessary) is important, and it’s not as hard as you think.
I’ll show you how below.
Different Types of Student Loans
#1. Private Student Loans
Private student loans are from private lenders or banks. If you default on them, you’re in the same boat you’d be if you defaulted on a car loan or credit card. Lenders give you 90 days typically. Once you hit 90+ days, the lender takes action.
The lender must follow the Fair Debt Collections Practices Act when trying to collect the funds. This works in your favor.
They can’t immediately garnish your wages or use threatening tactics. Lenders can sell your account to a collection agency or go through the court system to place a judgment on you, though.
Again, lenders can take action as soon as you are three months late.
#2. Federal Student Loans
Federal student loans are from the government. They have different rules, starting with when they’ll take action on your defaulted loan.
First, they give you chances to defer your loan payments or request forbearance if you have trouble paying your loans.
They also offer several income-based repayment plans that lower your payment according to your current income.
If that’s not enough, you have NINE MONTHS to figure something out before they consider you in default.
If you can’t get yourself together in those nine months, then you’ll be in a bit more hot water since the government gives such a long grace period.
If you default on either loan outside of the ‘grace period’ you’ll see some or all of the following:
- Damage to your credit score
- Calls and letters from a debt collection agency
- A judgment was taken against you
- Wages garnished
- Levies on your assets or even your federal tax refunds
What Student Loan Information Can You Remove from Your Credit Report?
Any defaulted or negative credit information shows up on your credit report. It’s how our system works.
You agreed to pay, and if you don’t, the lender reports your account unpaid. But sometimes, errors happen, and when they do, you can have them removed.
Don’t get too excited, you can’t have late payments removed if you didn’t pay your debt. But, mistakes happen, and that’s what you can get removed.
But you must prove it. You can’t say you made the payments on time and expect the credit bureaus to change the reporting. Ask your loan servicer for a payment history statement.
Next, compare the statement to your bank statements. Did you miss a payment and not realize it? Work with your servicer to get caught up and possibly ask for a Goodwill Delete (more on that below). If the servicer reported in error, prove the error to them with canceled checks and/or your bank statement.
Request that the servicer corrects the information reported to the credit bureau but do it in writing. Don’t agree to anything verbally.
Student Loans that Don’t Belong to You
If you don’t monitor your credit reports, you may never realize there’s a loan reporting that doesn’t belong to you. It sounds strange, but it happens often.
Transposed numbers, misspelled names, or duplicate names create issues, leaving you with a. loan on your credit report that isn’t yours. This is one of the most straightforward problems to deal with because it’s easy to prove that the account doesn’t belong to you.
Related: Best Credit Monitoring Services
If you have a forbearance or deferral agreement, the servicer cannot report any negative information during that time. But sometimes they do.
Whether the servicer did not know about the deferment agreement or they just overlooked it get in touch with them.
Provide the documentation from your lender proving the dates of the deferment or forbearance and request that they fix the information with the credit bureaus. If the lender doesn’t fix it, go directly to the credit bureaus with your dispute (in writing).
Default Status Correction
If you’re still in school, but your student loans report defaulted, it’s an easy fix.
Contact your school and ask for proof of attendance dates. Compare what the school has to the records your loan servicer has.
If the loan servicer doesn’t have the right information, provide the data you have, and ask for them to correct your account status with the credit bureaus.
Make sure you follow up with the credit bureaus. Don’t assume your loan servicer fixed the issue. If you check your credit reports and they don’t reflect the right information, dispute the information with the credit bureau yourself.
How to Remove Student Loans From Credit Report
1. File a Formal Dispute with the Credit Bureaus
Once you know your student loans aren’t reported correctly, file a dispute with the reporting credit bureau using these steps:
- Pull all three credit reports
- Figure out which bureaus report the incorrect information
- Write a dispute letter that includes the details of the error, what information should be changed, and the proof you have to back up your claims
- Wait 30 days for the credit bureaus to respond
2. Write a Goodwill Letter
If the default is legit but was an accident or oversight, ask for a Goodwill deletion. You admit you made a mistake, explain why it happened, and ask that the servicer delete the negative information. Do this after you get current on the payments, though.
3. Negotiate a Pay for Delete
If you’re more than a little behind, ask for a pay for delete in your negotiations. Work with your lender on a plan to get caught up.
They may offer you a payment arrangement, but before you agree on anything, ask for them to delete the negative information in exchange for payment.
4. Consider Hiring a Credit Repair Company
If all of this makes your head spin and you don’t know where to turn, hire a credit repair company. While they have to operate within the law, they have ways to work with credit bureaus to delete your negative credit information.
Sometimes it’s as small as a misspelled name or transposed account number. Other times it’s a larger issue that they catch and dispute, making the credit bureau delete the negative information.
Related: Credit Saint Review
How Long Do Student Loans Remain on a Credit Report?
Delinquent student loans stay on your credit report for 7 years. That sounds like a long time to pay the price for one mistake, but it’s not as bad as it sounds.
The first couple of years your credit score will drop quite a bit. As time goes on, though, it has less impact on your credit score.
You can help matters by paying your existing debts on time, keeping your credit balances at less than 30% of your credit line, and only opening new credit when you absolutely need it.
Is It Bad to Have Student Loans on My Credit Report?
It’s actually good to have student loans on your credit report IF you pay them on time. Any good credit helps your credit score.
A timely payment history helps your credit score the most. But having a good mix of installment debt (student loans) and revolving debt helps too.
You don’t have to be in a rush to get your student loans off your credit report if you didn’t default. They may even help your credit score.
But, if you defaulted, made payments late, or have other clerical issues, it’s important to fix the information as soon as you can.
Bottom Line: How to Remove Student Loans From Credit Report
It takes a little legwork to remove student loans from your credit report, but it’s not as hard as it sounds. Start with your loan servicer to figure out where the issue occurred.
If you get nowhere, get your proof and dispute the issue with the credit bureau or hire a credit repair company to do it for you.