VA disability loan discharge

[nwrainman]

I had credit scores near and above 800 in July 2013. I had just spent 8 years tied up by the VA on a disability claim. I received my total and permanent disability in early 2013. I don't have any missed payments or any other negative information in my credit history. In November 2013 I applied for a home improvement loan on the new house I bought in July 2013. I was turned down because of a poor credit report. I pulled all three credit companies with FICO scoring. And I was stunned. My credit scores had dropped by 125 to 150 points down. 800 to 650. I had received in my disability file a form to submit for loan forgiveness on my $16,000 in stafford school loans that had never been late and it was approved. I have no late payments listed on any credit reports including Sallie Mae the student school loan. I finally after a month of phone calls got Experion to delete my Sallie mae account and my FICO with them increased 100 points but not back to normal. FICO finally admitted that they "do a more complete credit review". They said that they were reporting, 'loan returned to the government'. According to the secret fico algorithm, that means default. My loans were infact paid by government insurance do to my disability. Sallie mae reports 0 balance, 0 past due and "account in good standing". FICO says that any loan that is not payed off by the creditor is a credit risk, so they embellished the loan to say that the loans were in collections and over 60 days past due. I served my Country and now I am being served this. The information will remain on my credit report for 7 years, ruining my perfect credit record. I have tried everthing, but the chief legal counsel for FICO wrote me and said that i was a credit risk and suggested that I have the credit bureaus remove the loans from my file (lowering my credit history by 14 years). Experion did, but Transunion and Equifax refuse.

[gdale6]

If you have proof of forgiveness file a CFPB complaint on the creditor and the 2 CRAs. Fico is just a scoring algorithm it takes info from your credit report to generate the score they have nothing to do with the integrity of the info submitted to the CRAs thats the responsibility of the creditors who report the information.

[nwrainman]

Fico told me that they do a deeper investigations and if they see any codes in the comment section they use their own interpretation. They see a "returned to the Government" code AL and it once was only used for loans that defaulted. Now it is sometime used for paid of by insurance but FICO won't change. In fact they send me a letter saying that I was a poor credit risk because i am disabled and had my loan paid off by Student loan insurance, which i paid for. Sallie Mae won't remove the code and FICO refuses to interpret it any other way but bad. Only Veterans are reported by Sallie Mae for loan paid by insurance. The rest are reported by Nelnet and they don't use that code so, they don't get flagged by FICO. Hopefully now that my Senator Patty Murphy has taken on my case maybe someone will do the right thing. I have never had a late payment on anything in 10 years, but If you score it through FICO it say I had 6 accounts past due 60 days, and I did not. If they score it with any other score system I do not show any 60 day past due. On the Sally Mae report sent to the credit bureaus it says, never past due, 0 balance and "account in good standing'. Explain that FICO.

[Anonymous]

I hope you find success sir, I just helped a family member through a discharge due to TPD, luckily we did not encounter this situation as all his loans were through Nelnet. I had no idea this was possible. I will definitely keep this in mind, if I ever hear of, or know someone that is going this route, I will likely recommend that they consolitdate the loan away from Sallie Mae before applying for the discharge.

I wish you luck, I truely do, as a former servicemember myself I am appalled that this could happen to you, someone who gave much more than time to the military.

I will say that I am not surprised however, as my own experiences with Sallie Mae, mostly through my wife's student loans (which we're consolidating away from that evil company), have been extremely negative. My wife called and stated that she was no longer working due to being pregnant and requested a forbearance until she gave birth, shortly after which she would be returning to graduate school. They told her she may be lying and that they needed a note from a doctor, and they accused her of lying about her income, and several other things. They also LIED, blantantly to her about being able to qualify for the "pay-as-you-earn" program which would allow her to pay nothing while unemployed, and pay later based on her income.

They told her that she did not qualify for that, and told her she only qualified for one income-based repayment plan (after research, it was the one that netted the MAXIMUM in interest for them over 20 years). Looking at the student aid government site, she qualified for all but one type of income-based repayment, including the "pay-as-you-earn" and we chose to consolidate to avoid dealing with Sallie Mae any further as they are a money-hungry company willing to mislead to pad their bottom line.

[nwrainman]

I wrote a long responce, with negative info on FICO and it would not let me post it and deleted it. Next time I will use note and cut & past to see if I can beat their censors.
Neil Williams

[nwrainman]

A copy of a letter from the chief legal counsel of FICO to the Attorney General os the state of Washington.

April 3, 2014
Ruth E. Holbrook BY EMAIL AND US MAIL Program Specialist 3, Consumer Protection Division 103 East Holly Street, Suite 308 Bellingham, WA 98225-4310 belcrc@atg.wa.gov
Re: Neil T. Williams, File # 443714 Dear Ms. Holbrook,
In response to your email on March 18, 2014 regarding a complaint filed by Neil T. Williams, FICO has done an investigation of the circumstances that have caused his FICO® Score to be negatively affected. As Mr. Williams discovered when Experian removed the Sallie Mae loan from his credit report, and his FICO Score “went back up to normal”, the FICO Score is simply a mathematical model that interprets the credit information that is available in the credit bureaus.
The credit bureaus get their information from lenders, who voluntarily report the credit transactions of their customers. Generally, the credit bureaus do not alter or remove credit information received from lenders unless it is inaccurate, and in this situation, the information is not inaccurate: Mr. Williams did have a loan that was discharged through an assignment to the federal government. When that information is assessed by the FICO® Score, it is treated as a negative indicator, just as it would any other discharge of a debt or assignment of the debt.
The FICO® Score is generated by an algorithm that FICO developed using anonymous credit bureau data. It presents an assessment of credit risk based on objective factors that have been proven to correlate with such risk without making any assumptions about those factors. For example, the FICO algorithm does not consider why a loan discharge or an assignment may have occurred. It treats a discharge or assignment to a guarantor as a negative indicator of increased credit risk. Accordingly, the assignment of Mr. Williams’ Sallie Mae loan to the government, as contained in his credit report at Equifax and TransUnion, was interpreted by the FICO credit scoring algorithm as a negative indicator.
It appears in this situation that Sallie Mae’s report to the credit bureaus – that Williams’s student loan had been assigned to the U.S. government and discharged – was accurate; the credit bureaus’ coding of the loan discharge/assignment to the guarantor was accurate; and the FICO® Score model properly assessed the increased credit risk represented by the discharge. Going forward, Mr. Williams may want to request that Equifax and TransUnion remove the Sallie Mae loan entirely from his credit report (as Experian did), or he may want to explain this situation, as we have described it above, to prospective creditors.
FICO continually reassesses the predictiveness of its FICO® Score models, and we strive to make our models useful tools for creditors when the creditors need to make accurate predictions of the creditworthiness of credit applicants such

[nwrainman]

as Mr. Williams.
Sincerely,

Daniel Lowin Senior Counsel FICO
CC: Neil Williams