Rehab SL, or Consolidate?

[Anonymous]

Hey guys, I've got a question about my student loans and credit repair. 

So I originally had three student loans from Sallie Mae totaling $5096. I know they weren't much, but I was in a postition where I just couldn't make the monthly payment So they've defaulted and report on my credit as so. They were sold to the US Dept of Education I believe, and now those loans are reporting as baddies on my credit also. 

I called and received three options; 

1). Lump sum payment of 90%. This equals out to be rougly 4k. The loans will report as settled in full, but won't change the past history of 120 days late or whatever. 

2) Rehabilitate the loan for nine months, and then the account will be in good standing. At $326 a month, this would take roughly 17 months after interest. After that, the loans will reflect that they've been paid on time. 

3). Direct Consolidation loan would group all three loans together at a 6.5% rate. The payment would be monthly for $58 for 120 months or ten years. Monthly this would be the cheaper option, but I would end up paying more money at the end of it. The problem would be that the three loans from the DOE woud still report as baddies, and the consilidation loan would report as a new line of credit I believe. I don't think this is a good option at all, but it's something to consdier I think.

Which would be my best option for credit repair and financially? These three loans are the last hurdle for me to be on my way to great credit. 

[AutoBot]

I assume option #2 will still show  the 120 day late marks on your credit reports? If so, I would be leaning towards option #1.

[Anonymous]

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@AutoBot wrote:

I assume option #2 will still show  the 120 day late marks on your credit reports? If so, I would be leaning towards option #1.

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I believe the original three loans from Sallie Mae will report as defaulted or whatever, but the three loans from the US DOE would reflect that they've been paid on time since the very beginning. Then I'd just have to work on Sallie Mae to either delete the TL or change the reporting status, which I'm not hopeful for at all. 

[Anonymous]

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@Anonymous wrote:

Hey guys, I've got a question about my student loans and credit repair. 

So I originally had three student loans from Sallie Mae totaling $5096. I know they weren't much, but I was in a postition where I just couldn't make the monthly payment So they've defaulted and report on my credit as so. They were sold to the US Dept of Education I believe, and now those loans are reporting as baddies on my credit also. 

I called and received three options; 

1). Lump sum payment of 90%. This equals out to be rougly 4k. The loans will report as settled in full, but won't change the past history of 120 days late or whatever. 

2) Rehabilitate the loan for nine months, and then the account will be in good standing. At $326 a month, this would take roughly 17 months after interest. After that, the loans will reflect that they've been paid on time. 

3). Direct Consolidation loan would group all three loans together at a 6.5% rate. The payment would be monthly for $58 for 120 months or ten years. Monthly this would be the cheaper option, but I would end up paying more money at the end of it. The problem would be that the three loans from the DOE woud still report as baddies, and the consilidation loan would report as a new line of credit I believe. I don't think this is a good option at all, but it's something to consdier I think.

Which would be my best option for credit repair and financially? These three loans are the last hurdle for me to be on my way to great credit. 

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From what I have read in here, rehab is the way to go. It removes all derogs and you end up with shiny new positive accounts.

[rwatson200]

I just finished up rehab at the beginning of November. My loan was through ACS/BOA and is still on my credit report with all the derogs... All they did was remove any notations of it being with the government or in default. Navient now reports 2 shiny new tradelines that date back to 2007 though, so thats sweet.  Rehab helped my score out more so than consolidation would have i think.