How to get defaulted or delinquent student loan info off your credit report

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Are you having student loan problems? Well, you’re not alone. As of 2020, around 45 million Americans collectively owe $1.56 trillion US Dollars in student loan debts. Yes, that’s definitely a lot of money making student loans the second highest consumer debt in the United States, behind only mortgage debt. The more alarming fact is that more than 10% of these student loan borrowers have problems with delinquency or default in their loans.

Can you remove student loans from your credit report? 

Yes. You can’t get rid of it if the negative information is yours and it’s accurate. But if you found an error on your credit report, you dispute it with the major credit bureaus.

When Can You Dispute Student Loans On Your Credit Report?

If you believe that the negative student loan entry in your credit history was reported incorrectly, you can dispute this entry as part of your rights under the Fair Credit Reporting Act. There are instances when your student loan might have been mistakenly placed in default so you can dispute this. Doing so will improve your credit score.

Here are some scenarios that allow you to dispute the student loan placed in default on your credit report:

Scenario 1: You Are Current In All Your Payments

If you have been religiously paying your student loan debts but were still reported as delinquent or in default, you can file a dispute to have this corrected. You have to gather payment records as evidence that all your payments have been made on time.

Scenario 2: You Are Still In School

If you are still in school, your student loan cannot be placed in default. What you need to do is to ask your school for a record of attendance and show this to your lender as proof that you are still attending school so they can correct the default status on your credit report.

Scenario 3: You Were Approved For A Student Loan Deferment Or Forbearance

If you are still in school, your student loan cannot be placed in default. What you need to do is to ask your school for a record of attendance and show this to your lender as proof that you are still attending school so they can correct the default status on your credit report.

Scenario 3: You Were Approved For A Student Loan Deferment Or Forbearance

A student loan deferment or forbearance allows you to temporarily suspend your student loan payments. Thus, your loan should not be placed in default. A student loan deferment suspends your payments without interest accruing, while a forbearance suspends your payments but with interest accruing.

If you were approved for either forbearance or deferment, and your student loan was still placed in default, you can send a dispute letter for the entry to be corrected.

Scenario 4: You believe the student loan entry is incorrect

According to an FTC study, 1 in 5 consumers had an error in at least one of their credit reports. If after checking your credit report, you found student loan entries that you believe are incorrect or not yours, you can try disputing these entries by requesting that the loan servicer send you proof that the loan was indeed yours in the first place. 

If you’re lucky, you could get student loan entries off your credit report even if the mistakes are minor, however, this is not usually the case especially now that many files and records are computerized.

How to Remove Old Student Loans From Credit Report?

If you are planning to file a dispute to have incorrect student loan entries removed from your credit report, you can follow the steps outlined below. Take note that filing a dispute is not a guarantee that the entry will be removed, however, it is still worth a shot as the loan servicer or the credit bureau could find after the investigation that your claim is valid.

Step 1: Request For A Free Credit Report From The Three Major Credit Bureaus

If you want to file a dispute, it’s important that you have the latest copy of your credit report. Don’t worry because you don’t need to pay anything to have this copy because you are entitled to one free copy every year from TransUnion, Experian, and Equifax–the three major credit reporting bureaus. 

Step 2: Check For Inaccuracies

When you get a copy of your credit report, review it carefully and check for inaccuracies. Look for the student loan entries and see whether there are mistakes in there. While you’re at it, it’s worth checking the report entirely for other mistakes as well. It is possible that mistakes will only be on one and not all three credit reports.

Some common mistakes that you can look for include the following:

  • Misspelled names
  • Incorrect home address, birth date, Social Security Number
  • Incorrect entries due to identity theft or fraud
  • Duplicate accounts
  • Outdated entries
  • Incorrect payment history

Step 3: Send A Dispute Letter To The Credit Bureaus And Information Provider

When filing a dispute, you can go two different routes. You can file a dispute with the credit bureau or you can file a dispute with the loan servicer. If you file a dispute with the loan servicer and your request was not granted, you can try filing the dispute directly to the credit bureaus and vice versa.

How to File a Dispute with the Loan Servicer

To file credit with the loan servicer, you can look up their information on their company website. If you cannot find this info, call the credit bureau to get this information from them. Once you have the contact details, send a dispute letter either online or via mail. Don’t forget to enclose proof or evidence if available to support your claim. Otherwise, you can also ask them to furnish the evidence if you’re contesting whether the student entry is yours in the first place.

You can use this template provided by the Federal Trade Commission:

FTC SAMPLE DISPUTE LETTER FOR INFORMATION PROVIDERS

Filing a Dispute with the Credit Bureaus

It is also possible to file a dispute directly with the credit bureaus on which the student loan entries appear. You can file a dispute online or via mail. To file a dispute online you have to go to the dispute page, create an account, and follow the procedures provided by the credit reporting agencies.

If you want to send a physical mail. You can send it to the following addresses below:

  • Experian Dispute Department

P.O. Box 4500

Allen, TX 75013

  • TransUnion Consumer Solutions

P.O. Box 2000

Chester, PA 19016-2000

  • Equifax Information Services LLC

P.O. Box 740256

Atlanta, GA 30374-0256

Here is a sample letter that you can use as a template provided by the FTC.

FTC SAMPLE DISPUTE LETTER FOR CREDIT BUREAUS

The dispute process will take at least 30 days so you have to wait for that period to see whether your complaint was resolved. You should get a confirmation from the credit bureau, if not, you could follow up. You have to wait the next month to request another copy of your credit report to see if the change is already reflected as it may take about 4 weeks for the information to be updated.

Can You Remove Accurate Student Loans From Your Credit Report?

Upset young woman read postal letter get bad news in paperwork, unhappy worried millennial female receive negative answer reply in post correspondence, dismissal or eviction notice

If your complaint was accepted, there is a possibility that your student loan entry will be corrected or even deleted from your credit report. However, if the entry was verified to be accurate, it will stay put on your credit record until the 7 years are through. This is obviously unfortunate for you because having a student loan in default on your credit report can hurt your credit score.

The good news is that while you cannot completely remove the student loan from your credit report, there are ways that you can try to remove the default status on your student loan. If you’re concerned about improving your credit score, the student loan itself is not the main problem. 

In fact, positive payment history will actually help your credit. However, if you have a student loan in default or you have missed monthly payments, these mistakes are what’s really hurting your score. To improve your score, what you want to happen is to remove the default status or late payments from your student loans to improve your credit report.

If you have already tried sending a dispute and failed, here are some other options that you could try out to get your student loans out of default or remove late payments from your credit record.

Option 1: Send A Goodwill Letter

Let’s say you’ve been paying your student loans regularly but a financial hardship caused you to miss a few payments. Now, you have been regularly paying your student loans but those late monthly payment entries on your credit record are still there hounding you.

What you could do in this scenario is try to send a goodwill letter to your lender. This letter is an emotional appeal for the lender to remove those late monthly payment entries. 

For this to work, you have to tell a convincing story of what happened during that time, accept responsibility, and also illustrate how you are a good borrower except during that specific period. If you are still in default or have not paid your debts, this might not work.

Option 2: Apply For Student Loan Rehabilitation

A student loan rehabilitation could be your one chance to get out of default without hurting your credit score. If you have federal student loans, you could apply for a rehabilitation program wherein the default status will be permanently removed from your credit reports after 10 consecutive months of good payment behavior.

The good news is that the amount you will pay will depend on your income and will be determined by the loan holder. Some borrowers who have gone under student loan rehabilitation reportedly paid as low as $5 a month during the 10-month period.

Option 3: Check If You’re Eligible For Student Loan Forgiveness

Do student loans go away after 7 years? Yes. But just because your loan is off your credit reports after 7 years does not mean it disappeared completely and you are not required to pay it anymore. 

If you have old student loans and have made considerable payments towards them, you can check whether you are eligible to apply for student loan forgiveness. When your student loan is forgiven, canceled, or discharged, it means you won’t need to pay it anymore. Go to the Student Aid Website to learn more about student loan forgiveness.

Option 4: Pay Off The Loan

Paying off the money you owe if funds are available is obviously one of the surest ways to get the loan out of default. This option is not, however, as easy as it sounds with most people struggling to make payments every month.

Can You Get Student Loans Off Your Credit Report Before 7 Years?

Upset young businesswoman working with documents in office

A quick search online will show you videos of people guaranteeing that they have been successful getting student loans off their credit reports way before the 7-year timeline. Most of these people are out there to sell you credit repair letter templates or services that promise to help you get these loans off your credit reports. 

Maybe you’re wondering whether it’s worth taking the bait and paying the fee that they’re asking. You’re probably here reading this right now trying to double-check whether it’s just a scam or will it be money well-spent.

So, here’s the straight answer to your question of whether you can get student loans off your credit report before the seven years are up: No, you cannot legally get a student loan off your credit report before 7 years if the information is accurate and could be verified.

If you took out a student loan and have a defaulted loan, you cannot just take it off your credit report just because you want to. You have to wait seven years before it falls off your credit report.

How Do Late Payments and Defaulted Student Loans Affect Your Financial Health?

Missing payments or defaulting on your student loans can negatively affect your credit standing and your financial health. It could lead to high-interest rates, wage garnishment, and even loss of eligibility for other federal student loans.

How Can You Recover From a Defaulted Student Loan?

You can still rebuild your credit even if you’ve defaulted on your loan or have any missed payment. Here are a few things you can do.

  • Your credit utilization ratio must not exceed 30% of your credit limit
  • Make timely payments
  • Avoid applying for multiple credit cards in a small amount of time
  • Monitor your credit regularly so you can make sure that there are no errors in your credit report

Don’t Ignore Your Student Loans

If you have student loans and you’re late on your payments, it is better to deal with the problem head-on rather than ignoring it. The longer you put it on hold, the impact will be worse. Look for options like student loan rehabilitation or consolidation to get your finances back on track.

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