How Exactly Does Rehab Work??

Anonymous · ‎07-20-2016

I have one payment left until my student loan rehab is complete. I've asked Navient a lot of questions about what happens after and they haven't given me any real info. If anyone could answer a few basic questions about it I would be forever thankful.

1. How does this affect my credit report, what changes? Are my old lates and collection comments removed. Is it if I never defaulted in the first place?

2. Who do I pay after? I'm paying Navient $47/month right now. I know my payment may change. Will I get a letter from a different dept letting me know my new payments and due date? Will they contact ,e or do I contact them?

3. How much will this affect my score? I have 9 separate loans showing on my report. All showing defaulted and in collections.

4. Will I be able to refinance once this is complete? I know this varies on score/income/report, etc., but is the option there if I qualify. I'd rather have 1 loan showing opposed to 9.

SCF · ‎07-23-2016

@Anonymous wrote:

1. How does this affect my credit report, what changes? Are my old lates and collection comments removed. Is it if I never defaulted in the first place? The collection accounts will be removed, and the status on your defaulted tradelines will be updated to remove any mention of the default. Some lenders will delete the old tradelines in full, or remove the lates that led up to the default, but some of them will not.

2. Who do I pay after? I'm paying Navient $47/month right now. I know my payment may change. Will I get a letter from a different dept letting me know my new payments and due date? Will they contact ,e or do I contact them? You will receive a letter from your collection agency when the rehab is completed with the contact information for your new servicer once your loan is picked up. Keep paying the CA until they say the loan has been picked up, and contact them if you have any questions about how to reach your new servicer.

3. How much will this affect my score? I have 9 separate loans showing on my report. All showing defaulted and in collections. That really depends heavily on the rest of your report. You will also see a boost when your new servicer starts reporting your backdated tradelines.

4. Will I be able to refinance once this is complete? I know this varies on score/income/report, etc., but is the option there if I qualify. I'd rather have 1 loan showing opposed to 9. Yes, but you probably don't want or need to. Federal loans generally should not be refinanced to private loans because you lose important protections and options like deferment, forbearance and income-driven repayment plans. Consolidating your federal loans really only makes sense if you have loans with multiple servicers because it won't change your interest rate. Many people have multiple SL tradelines on their reports and strong scores, this is normal.

Aduke1122 · ‎07-24-2016

+1 SCF hit it all on the head , I have only one payment left for my rehab so I can't speak as too what happens with my credit report but as others have gone thru this I have followed thier threads very close and I'm hoping I get lucky and get all lates and everything negative removed and then back dated to 2012 which is when mine was opened .
It really is a great program if you do qualify to be in it go for it , yes it takes 9 long mth but it's well worth it to get out of default and get all that bad stuff removed , which if you just chose to reconsolidation it would all remain on your reports for 7 years. One thing I will.say is this , if you do enter into the program DON'T EVER MISS A PAYMENT! NOT ONE! If you mess up this is the ONLY chance you get to do the Rehab. One time thing!