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Paid off education loan showing back up - over 10 years old

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Anonymous
Not applicable

Paid off education loan showing back up - over 10 years old

Hey folks -

 

Figured I would post this here and see if there was any additional information to be had.

 

Summary:  Started school Fall 1993.  Finished Bachelors, and then graduated from grad school, December 2001.  January 2001, I consolidated all my Stafford loans and Perkins loans (I had 4 or 5 of them.)  (I was in school from Fall 1993-Dec 2001 full time.)  I was in deferment the entire time.

 

The Stafford loans were fine.  The Perkins loans were really strange; the college I went to as a Freshman from 1993-1995 closed in 1998.  Ownership of the loans went to the US Department of Education.   Loan consolidated and US Dept of Education paid in full on 01/27/2002 after I finished school and consolidated. All is fine and dandy, apparently.

 

  • Looking at my Equifax and Experian reports in April 2003 (over a year after consolidation), I see the old loans as "Closed, Refinanced, OK" in the comments with no issues whatsoever on those two bureaus.  Credit score is 755 (Equifax).
  • Same thing in March 2005.  US Department of Education loan, only reported to Equifax and Experian.
  • June 2006, no change.
  • August 2006, it drops off of Equifax.  Still reported in Experian. "Account closed due to refinance".
  • Sept 2007, no change from August 2006.
  • July 2008, no change from Sept 2007.
  • March 2009, not on Equifax (Equifax credit score 772).  Did not pull Experian report.
  • Nov 2010, not on Equifax.  Still on Experian with no issues (same as July 2008).
  • August 2011, not on Equifax.  Still on Experian with no issues.  Equifax score 775.  
  • November 2012, no longer on Experian (dropped off).  Now, it's on Equifax again.  I noticed it when my Discover Score Tracker showed one credit score at 747 (Equifax), and the other two are 790 and 782.

So, printed out Discover's report and went over it with a financial professional.  We could not figure out what was the "major negative item".  Signed up for trial of myFICO, and found the US Dept of Education Loan with a flag by it.

 

Balance [?] Current Status [?]

$0Pays account as agreed

Seven year payment history [?]

30 days late60 days late90+ days late

0 times
0 times
0 times

Worst Delinquency [?]

None Reported

 

Looks good, right?  However, look at this:

 

Descriptions [?]

  • Student loan assigned to government
  • Closed or paid account / zero balance

Showed this to the same financial professional, and he said that's why it's being dinged.  "Assigned to government" is a flag that's assigned to any Perkins loan given by a university to the government, usually because the borrower defaulted.  However, in my case, the school gave ALL it's Perkins loans to the government when it closed in 1998.  It's beyond me why this shows up after being off my report (in good standing, too) after almost four years, and almost 11 years after it's been paid off in full.

 

So, I've disputed this with Equifax saying that the loan was paid off almost 11 years ago.  I have the actual paperwork where Nelnet (who consolidated my loans) said it paid the US Department of Education for that Perkins loan in February 2002.  I did put a little blurb in the Equifax dispute about this.  Of course, after talking to the US Department of Education, they claim that "any" loan they have is a defaulted one if the school gives it back to them.  They had no way to answer my question about what happens when a college closes and the Perkins loans all get given to the government.  Schools must not close that often, I guess, for the young guy who answered the phone to know.

 

Questions I have:

1) Is that all I need to do?

2) Will this thing just fall off after I dispute it (seems like the easiest way)?

3) Anyone anticipate any issues with this?

4) Why the heck did this show back up after four years, and why did that "Assigned to government flag" get added to ding my Equifax score, when it wasn't assigned to the government for negative reasons?

 

Sorry for the long post, but that's about all the info I have....

 

Message 1 of 9
8 REPLIES 8
RobertEG
Legendary Contributor

Re: Paid off education loan showing back up - over 10 years old

When, and how long, account information can be reported to a consumer's credit file is not regulated per se under the FCRA.

What is regulated is the reporting of any adverse information under an account, which the CRAs are required to exclude from the consumer's credit report after expiration of the pertinent credit report exclusion period set forth in FCRA 605(a)(4).

 

The CRAs have an informal policy of deletion of old accounts after a lenghty period from account closure in order to purge their files of information they no longer consider to be relevant.  That period is in the ballpark of 10 years.  However, it is not uncommon for old accounts to remain for many years thereafter.  It's primarily an issue of if and when the CRAs decide to exclude.

 

Their reporting does not include adverse information, so I see no FCRA violation.

While their may be an inference of the loan being adverse based on its "return" to the USDEC, it is not specifically reported as adverse.  In fact, it is reported as paid, and thus there is no inference of outstanding debt.

 

Why FICO scored adverse information based on their reporting is unclear, as it would apparently have a very old age of account.........

Maybe someone with similar experience can identify the specific FICO adverse item that dinged the score.  I dont see it.

 

 

Message 2 of 9
Anonymous
Not applicable

Re: Paid off education loan showing back up - over 10 years old

myFICO had an adverse flag next to this item. It was the only one on the report.

Equifax flagged the "Assigned to government" description as disputed today, and I got an email from myFICO stating my score went up to 804 from 702. MyFICO says "Consumer disputes - reinvestigation in process" now for the description.

So, that description must be derogatory. If so, isn't that enough of a reason for an 11-year paid off loan to drop off just on that technicality? (Don't derogatory things, even mistakes, fall off after seven years?)

I don't care about the item being on there, but that adverse description mistake has to go Smiley Happy

Message 3 of 9
p-
Valued Contributor

Re: Paid off education loan showing back up - over 10 years old

Have you tried contacting the ombudsman?

Message 4 of 9
Anonymous
Not applicable

Re: Paid off education loan showing back up - over 10 years old

Well, Equifax denied the dispute... even though the derogatory information is now almost 11 years old.

 

I filled out an Ombudsman form, and am mailing Equifax a copy of the actual consolidation loan payment papers, where it shows that the loan was paid in full back in 2002. I also got a copy from the DoE themselves that said it was paid in full (although, they didn't say when on their papers).  

 

So, that's going out in the mail to Equifax tomorrow.  

 

Hopefully I hear from one or the other.  This is nuts.

 

Message 5 of 9
Shogun
Moderator Emeritus

Re: Paid off education loan showing back up - over 10 years old

I do see it as a FCRA violation.  It is time barred by the CRTP to appear on your CR.  I would file a complaint with the FTC.

Starting Score: 504
July 2013 score:
EQ FICO 819, TU08 778, EX "806 lender pull 07/26/2013
Goal Score: All Scores 760+, Newest goal 800+
Take the myFICO Fitness Challenge

Current scores after adding $81K in CLs and 2 new cars since July 2013
EQ:809 TU 777 EX 790 Now it's just garden time!

June 2017 update: All scores over 820, just pure gardening now.
Message 6 of 9
Anonymous
Not applicable

Re: Paid off education loan showing back up - over 10 years old

Would a note to the Illinois Attorney general be of any help as well, or just the FTC if my letters to Equifax and the Ombudsman don't work?

 

Thanks!

 

Message 7 of 9
Shogun
Moderator Emeritus

Re: Paid off education loan showing back up - over 10 years old

You bet.  The negative aspect of any TL has a time period where it will be excluded.  This TL has passed all of them.

Starting Score: 504
July 2013 score:
EQ FICO 819, TU08 778, EX "806 lender pull 07/26/2013
Goal Score: All Scores 760+, Newest goal 800+
Take the myFICO Fitness Challenge

Current scores after adding $81K in CLs and 2 new cars since July 2013
EQ:809 TU 777 EX 790 Now it's just garden time!

June 2017 update: All scores over 820, just pure gardening now.
Message 8 of 9
Anonymous
Not applicable

Re: Paid off education loan showing back up - over 10 years old

Update...

 

I forwarded (via snail mail) Equifax a copy of the actual loan consolidation paperwork from 2002, a note from the DoE saying the loan was paid off from consolidation (Back in 2002), and a form letter asking them to remove the "Assigned to Government" flag.

 

The reinvestiation is in progress once again as of today, and my score jumped from 701 to 801.  

 

I made sure to tell them in the letter nothing negative should be on that TL since it's over 10 years old at this point.  

 

Still waiting to hear back from the Ombudsman.

 

 

Message 9 of 9
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