topic Re: Consolidating Student Loans in Student Loans

Consolidating Student Loans

atarvuzdar — Wed, 29 Aug 2012 19:54:02 GMT

Hi all,

Friend of mine has a horrible credit file filled with a LOT of lates and CO's. I took a look at his EQ report and he's literally got 7 Nelnet loans and about 10 Sallie Mae loans reporting, as well as a Nelnet/Suntrust SL. He went through a really bad patch and is just getting back to good this year, but all of the lates on EVERY one of his student loans has absolutely killed his score. Looking at his report makes me hyperventilate because it just looks like no amount of good he does could make up for so many accounts reflecting 120 days late at various times over the past four years.

If he were to consolidate his loans would that cause them to just be reported as one tradeline for all the loans that were consolidated? I'm thnking that if this is the case that he could consolidate, all of his current student loan tradelines would report a $0 balance and paid in full and he would wind up with just one or two new tradelines for the consolidated loans which would (hopefully?) show a completely positive history, starting from the time the loans were consolidated going forward.

Is this possible? It really just seems that otherwise he's looking at a LOOOONG road to climbing out of the low 500's even though he's now current on all of those tradelines.

Thank you all!

Re: Consolidating Student Loans

SCF — Wed, 29 Aug 2012 22:42:48 GMT

Are they federal loans? With those lenders, some or all of them may well be. I would reccomend that he looks into rehabilitation first. You can search these forums for all kinds of information and experiences, but long story short, you work out a 9 month payment plan on the defaulted loans, make good on it, and then get new, clean tradelines for each loan. After that, the loans are eligible for consolidation and other federal benefits (like the Income-based Repayment plan, and deferrments, etc.).

Re: Consolidating Student Loans

webhopper — Tue, 04 Sep 2012 02:59:48 GMT

SCF wrote:
Are they federal loans? With those lenders, some or all of them may well be. I would reccomend that he looks into rehabilitation first. You can search these forums for all kinds of information and experiences, but long story short, you work out a 9 month payment plan on the defaulted loans, make good on it, and then get new, clean tradelines for each loan. After that, the loans are eligible for consolidation and other federal benefits (like the Income-based Repayment plan, and deferrments, etc.).

+1... This will be the quickest way for his credit file to recover from the damage done by the student loans.

I myself had 8 different SL tradelines. I completed Consolidation in 2007, Granted, none were ever late, but the consolidation made it easy to pay on time every time, because it was just one bill, instead of a bunch of different bills.

Re: Consolidating Student Loans

Sonic98 — Tue, 04 Sep 2012 17:58:34 GMT

I have loans with Sallie Mae, and they are all in deferrment currently. I've had a couple defferments before this one and a forbarance. They reported some of the loans as negative when they were supposed to be in either deferrment or forbarance. Sallie Mae won't correct it and the berueas are not updating after disputing. The loans list on my report as 5 positive and 15 negatives. That ratio might be slightly off, but it's close to that. I recently applied to consolidate my loan, but I was thinking I should probably remove the ones that are showing positive from the consolidation. How does that sound?

Re: Consolidating Student Loans

Sonic98 — Fri, 07 Sep 2012 14:45:26 GMT

Well, maybe I have no reason to consolidate at all

Re: Consolidating Student Loans

Sonic98 — Fri, 07 Sep 2012 14:50:47 GMT

Well, maybe I have no reason to consolidate at all. I'm assuming that consolidating those negative loans into a new loan would do me no more benefit than paying off a collection. From what I'm reading paying off installments doesn't do much for your credit anyway.

Re: Consolidating Student Loans

igids1 — Fri, 07 Sep 2012 15:10:27 GMT

Rehabbing is probably where to start, but just to clairy, sucessful rehabilitation does not automatically guarantee that you get fresh new positive tradelines. Some of the lenders will do this upon request. But rehabilitation will just remove the default status. Additionally, if they are 4 years old, they will start to fall off in a few years. If he remains current, paying on time, rehab etc, his scores will rise. Nothing will fix this immediately though. Its going to take 12-24 months, unless they do delete the lates after a rehab, in which case he is still looking at 9+ months. Theres no magic solution here.

Re: Consolidating Student Loans

Sonic98 — Fri, 07 Sep 2012 17:46:30 GMT

Doesn't your loan have to be in default to rehab?

Re: Consolidating Student Loans

SCF — Fri, 07 Sep 2012 18:42:47 GMT

Sonic98 wrote:
Doesn't your loan have to be in default to rehab?

Yes, you have to default before they will offer rehabilitation. If you haven't defaulted, the best plan is to find a way to bring the loans current, and make sure you can keep them current (whether that's by applying for a new payment plan, adjusting your budget, or some other way). Then, you can send goodwill letters to the lender in the hope that they might remove one or more of the lates.

Re: Consolidating Student Loans

Sonic98 — Fri, 07 Sep 2012 21:28:12 GMT

Right now they are current. They had been current before they went into defferment. They're all through Sallie Mae and one payment that I can afford once they come out of defferment. I was just wondering if there was any benefit to consolidating the ones that had been listed as negative on my credit. They're listed as either deffered or paying as agreed, but they still show up on the negative section of my reports

Re: Consolidating Student Loans

Justina40 — Thu, 20 Sep 2012 01:28:16 GMT

Re: Consolidating Student Loans

Sonic98 — Wed, 26 Sep 2012 16:15:43 GMT

I'm not sure if the last post was just a bump or not, but just so we're clear there is no real benefit to me consoldating my loans in my case?

Re: Consolidating Student Loans

SCF — Thu, 27 Sep 2012 06:53:59 GMT

No, there's no benefit to your credit report/score from consolidation. It won't remove any previous lates, so don't do it unless you want to take advantage of the logistical benefits (one payment to one servicer) or it makes sense financially (it can lower your minimum payment, and you may qualify for a small interest rate deduction).

Re: Consolidating Student Loans

Sonic98 — Wed, 17 Oct 2012 13:44:56 GMT

What if I only consolidate the ones that are in negative standing on my report. Even with it being only one payment, I think they list the Sub and Unsub seperately on the report. It wouldn't be worth having two positive items added to the report?

Re: Consolidating Student Loans

InvincibleSummer2 — Wed, 17 Oct 2012 20:06:20 GMT

Sonic, I'm not clear how your loans are reporting. When you say they're reporting "negative" - do you mean they are reporting with Lates?

If that is indeed the case, then you would have two new tradelines (potentially causing a drop in your AAOA) and the lates would still be there. So I'm not sure that consolidation would help you if the negatives you mention are due to the loans reporting as late.

Last but not least - are you looking at your annualcreditreport.com reports? Or somewhere else?

Re: Consolidating Student Loans

Sonic98 — Wed, 17 Oct 2012 20:49:00 GMT

This is what I'm saying. My student loans are with Sallie Mae. They show up on my credit report was almost 20 seperate accounts. Some of them show me being late. This should not be the case, but the CRAs won't accept my dispute, and Sallie Mae refuses to offer any assistance. When I pull my credit report from any of the three CRAs, some of them are listed under the "negative items" or "potentially negative accounts" or "accounts not in good standing" or whatever the terminology is on each of the 3 CRAs because they were listed as late. The loans have been in deferrment for a few months, and they were paid on time basically this whole year before they went into deferment. I'm pulling the reports I got directly from the CRAs after being denied credit was well as went I checked my FiCO score.

What I'm asking is if I consolidate just those, since I know paying off a loan or consolidating one doesn't really help your credit score, would it be worth it to do it anyway just to have accounts with no late payments add to the report, but not closing the ones with no late payments so I don't lose benefit of the age of those accounts.

I guess in a nutshell what I'm asking can adding accounts with a positive history help your score any or will the fact that the negative history has been there longer counteract that?

Re: Consolidating Student Loans

laz98 — Wed, 17 Oct 2012 21:53:45 GMT

Sonic98 wrote:

What I'm asking is if I consolidate just those, since I know paying off a loan or consolidating one doesn't really help your credit score, would it be worth it to do it anyway just to have accounts with no late payments add to the report, but not closing the ones with no late payments so I don't lose benefit of the age of those accounts.

This is a "can't have your cake & eat it too" scenario. Once you consolidate, the old accounts are closed. You cannot consolidate to try to start building positive credit history & still try to benefit from having the old tradelines open, too. Even if you could, it would look like you owed double what you actually owe, & you definitely don't want that. And in the hypothetical event that those accounts go bad, then you would end up with even more tradelines reporting negatively.

Re: Consolidating Student Loans

Sonic98 — Wed, 17 Oct 2012 22:18:00 GMT

Does it make a difference that on my consolidation application, I have to add them in one by one with the amounts owed as if they are all seperate loans. Even on my Sallie Mae account page it lists them all seperately, I believe even with different acocunt numbers

Re: Consolidating Student Loans

InvincibleSummer2 — Wed, 17 Oct 2012 22:54:46 GMT

Sonic98 wrote:
Does it make a difference that on my consolidation application, I have to add them in one by one with the amounts owed as if they are all seperate loans. Even on my Sallie Mae account page it lists them all seperately, I believe even with different acocunt numbers

Make a difference in terms of your credit score? None of the 20 tradelines will go away if you consolidate. They'll be closed and marked that way, but they won't disappear.

Re: Consolidating Student Loans

Sonic98 — Wed, 17 Oct 2012 23:41:09 GMT

I know they won't disappear. I'm asking is it possible to not close all 20 trade lines.