I completed loan rehabilitation over a year ago and my CR now shows a department of education account with a good payment history dating back to 2006 - awesome!
My problem is this - there is still a tradeline for a 'closed' department of education account with a zero balance and the status of that account is listed as 'collection account.' That trade line shows 17 months of on time payments before the loan was 'closed.' Does that status of 'collection account' represent a record of a defaulted loan? If so, should it have been removed as per the letter of the law? What's my next move here?
I've been doing a lot to establish/repair my credit and I'm not sure if this is holding me back or if my score hasn't improved much because I opened my first car loan and my first ever credit cards in the last 2 years (haven't been late on anything or carried a balance for more than a month in that time). This is frustrating stuff.
Thanks for your help.
Was this the same loan that was rehabilitated? If so I would dispute the collection notation. I would contact the lender directly. Yes it is hurting your credit score. For me, it has been easier to deal with lenders directly then CR when dealing with federal loans.
Something similar happened to me. I called the DOE and they said that they update all three CRAs when rehab is complete, so if it does not show as pays as agreed then it is my responsibility to dispute it, which I did last month. Today I got the myfico alert that my score raised 17 points because the status of that account was changed.
Differently YMMV situation.
Update: Called the dirct loans servicing center on 12/11 spoke to someone who immediately transferred me to the default resolution group saying the entry must have originated with them. Default resolution passed me back to direct loans but not before I spoke to a supervisor who was nice enough to explain what was happening with my case to the folks back at direct loans. Supposedly a fix was put in that day and it takes 7-10 days to get to the CRA's then my report will update whenever they get to it. This is me not holding my breath.
Finally got some resolution here. It appears to be all in who you talk to. After having 4 seperate people at the direct loan servicing center tell me they put in a CR fix and 2 years of BS my score finally got the bump (70 points) I expected when I started this process.
Yesterday I called the DLSS as a last ditch effort and asked to speak to a supervisor. When I got him on the phone I was as polite as possible as I explained the situation here's how the conversation went:
"I was under the impression that after my loan was picked up by a new servicer any record of a default was to be removed within 90 days. Is that correct?"
"yes, that is correct."
"well my loan was picked up 11 months ago and my 9th payment was 18 months ago and my report isn't fixed. Is there anything else you can tell me about when this fix will actually be completed?"
long pause..."I'm gonna have to put you on hold"
"Ok, sir. Thank you for holding. Now that you've got me involved you should get an email from DLSS within 3-5 days saying that your credit file has been updated."
I totally thought this was another brush off and was preparing to start calling lawyers today. I got off the phone with Direct Loans at 4:30pm yesterday and at 8:30am I had an email from my credit monitoring subscription saying my score had changed. Checked my report and the account status was changed from collection account/closed to paid/closed.
Keep on em people, they are legally bound to fix this problem. Don't let them tell you it can't be done. Here's the text of the relevant laws from another thread:
20 USC § 1078–6 (C)
Upon the sale or assignment of the loan, the Secretary, guaranty agency or other holder of the loan shall request any consumer reporting agency to which the Secretary, guaranty agency or holder, as applicable, reported the default of the loan, to remove the record of the default from the borrower’s credit history.
34 CFR § 682.405 (b)(2)
The guaranty agency must report to all national credit bureaus within 90 days of the date the loan was rehabilitated that the loan is no longer in a default status and that the default is to be removed from the borrower's credit history.
the applicable law for FFEL (stafford) loans is 20 USC § 1078–6, found here http://www.law.cornell.edu/uscode/uscode20/usc_sec_20_00001078----006-.html
the applicable regulation for FFEL loans is 34 CFR. § 682.405, found here http://law.justia.com/us/cfr/title34/34-184.108.40.206.40.html#34:220.127.116.11.18.104.22.168
the terms for rehabilitation of perkins loans are essentially the same as stafford
Ok Sallie Mae is showing my loan twice as in good standing with dates back to the day I opened the loan. They are also show the loans as defaulted paid by government with tons of lates. Should that be removed? Sallie mae had my loan before the rehab and bought them after the rehab. I disputed it online, nothing has happen who should I call?