Student Loan Rehabilitation And The Effect On Tradelines

[Anonymous]

I just made my 9th payment on a student loan rehab, don't want to be too specific but with interest and fees I now owe around 23k.  My loans were federal direct loans and the first one goes back to 8.5 years ago.  The CA that inherited my defaulted loans was FMS.  Now its just a waiting game to see how everything is handled with the CRA's.  In Feb. I had an eqfico of 541 and its now 602, really hoping for a significant increase so I can buy a house, also needing to get out of CAIVERS system.  Hopefully since FMS never reported to the CRAs and my loans are federal this will all clean up nicely.  Anyways ill update as I get more info, this thread has been an inspiration and wanted to add a newer experience to the thread. 

[Anonymous]

I should note my credit increase was due to other activity, I have no idea what my increase for rehab will be.... crossing fingers.

[Anonymous]

Just wanted to chime in with my success story and thank everyone here who shared their own experiences. This thread was very inspiring to me when my financial outlook was absolutely dreadful. I’ll try to keep this as brief and informative as possible.

I started out the year with a 520 FICO score. 6 defaulted federal loans and a collection account were cannibalizing my credit for YEARS. Enough was enough. After doing a bunch of research, I took the following steps and was able to turn 520 into 762 in approximately 10 months.

1. Stop being afraid of your debt and vow to conquer it at all costs. This is arguably the hardest step to accomplish. I probably dodged a million phone calls and letters in the years after my default. It’s the worst feeling in the world getting “UNKNOWN” calls and threatening letters day after day. This stuff does not go away, no matter how diligently you ignore it. Sign up with MyFICO or CreditKarma and get a good idea of exactly what you’re dealing with.
2. REHAB ANY LOANS THAT ARE ELIGIBLE! Rehabilitation is a truly magical tool for getting your loans out of default status and subsequently repairing the damage done to your credit. Dig up your most recent collections notice and call whatever number is listed. Simply explain to whoever answers the phone that you’ve finally decided to take responsibility and want to discuss your options. That first call is as humiliating as it is liberating. Rehab involves making at least 9 consecutive monthly payments so make sure whatever payment you agree on is do-able. Shoot for the smallest amount they will accept because 9 $100 payments are just as good as 9 $1000 payments. Just be mindful that you only get one shot at rehab so make sure you stay on top of it. In fact, sign up for auto-pay if it’s offered so you don’t even have to think about it. Once you’re informed that you have successfully completed rehab and your loan has been picked up by a new servicer, immediately dispute the derogatory accounts with all three bureaus and watch the negative information fall off. This can take a month or two depending on when the actual reporting gets done, but it will happen eventually and it will dramatically boost your scores. If your tax returns are currently being intercepted by the IRS, rehab will also stop that from happening. Like others here have said, once your loan is out of default and in good standing, it will go from being your biggest detriment to your biggest asset!
3. Open the best card you can realistically get approved for. In my case this was a $300 unsecured CapOne card and a $500 Express store card. It wasn’t much, but it injected some much-needed positive history into my report. Use these sparingly and pay the balances on time (early if possible) and they should start to help you. They’re also a low-risk way to begin using credit responsibly, which is always a good thing.
4. Piggyback off the strong credit of others. Ask your mother/father/brother/sister/wife/husband/whoever to add you as an authorized user on their highest-limit cards. FICO makes no distinction as to whether or not you opened this account or even if you have a physical card. Your credit score will start reaping the benefits of their positive payment history, account age, and credit limit within a month or so. This is by far the easiest and least risky way to quickly boost your numbers. Just make sure that whoever you ask pays their bills diligently because you will be tied to them.
5. Clean up any loose ends that may be holding you back. Comb through all three of your reports (you’re entitled to one free copy of each from annualcreditreport.com yearly) and dispute anything and everything that may be inaccurate. This won’t get you any massive score boost, but it’s important to keep everything nice and tidy. Plus, every last point counts.
There you have it. YMMV but this is the road I took to get where I am today. A year ago I was in credit hell with no end in sight. Now I’m sitting in the 700s and don’t have to deal with harassing phone calls, deteriorating credit and tax return garnishments. At the end of the day FICO is just a numbers game. Learn which metrics are hurting you and do whatever is necessary to fix them. There’s always hope. Just muster up the courage to face your issues head on and it WILL get better!

[Anonymous]

Thank you for sharing, I mean it!! Nicely done.

I am in my 3rd month of rehab.  This thread has given me hope, I fixed every other baddie and besides SL's i have 3 new positive TL's on my report.,  When the SL's report as a positive I think I just might pass out!!!!

[scvbd99]

I went from low 520s 18 months ago to 720-740 now.  

It's been a year since I finished rehabilitation...did it for 18 tradelines through 3 different servicers for a debt totalling $92K. Such a horrible nightmare, but it's finally over.

I got all of the credit cards listed in my signature in January of 2014, and they just keep raising my credit limits even though I never carry a balance, and usually make payments several times per month. 

I will never get myself into a financial mess again.  I just refuse.  I run pretty much everything through my cards for the rewards, but I will not carry a balance.  Ever. 

[Anonymous]

Congratulations, krissyboo! Seeing the derogs fall off your report and your score shoot up is pretty damn satisfying. I would definitely recommend trying some of the other things I had listed too. When combined, the effects of everything can really add up to a nice result. Best of luck and make sure to report back!

[Anonymous]

sabwcu, any new updates yet? Helping my wife repair her credit..she finished rehabilitation on the 15th and was picked up after a couple days by Great Lakes. Waiting for the changes to take place on her report, hoping it'll be significant. She's around 600 on all 3 CR and her negatives are 20 different student loan TL in collections all showing negative obviously. Hoping to purchase a home next Spring! Keep us posted as will I!

[Anonymous]

Today I got a letter from fed loan servicing, my four loans are serviced by them now, the letter said as of oct. 21, my last payment was the 7th but on paper it's backdated to the 1st.. I'll check my scores in a few days... a note for people who have made their last payment and are waiting, the earlier in the month the last payment is made the faster things progress, if made in the first ten days it averages 7-21 days. If made near the end of a month 4-6 weeks.. I got this info from a nice lady at the dept. of edu.

[Anonymous]

Great to know! Thanks!

[Anonymous]

Dept of Ed and their servicers sell loans on the 10th of the month. So schedule your payments before the 5th so they are posted in Dept of Ed system before then to be eligible for that months sale.

After your 9th payment, call servicer or CA you are rehabbing with, speak to supervisor, and ask them to manually review your account to verify all payments are posted , and all supporting docs are scanned into the dept of ed system.  If all of this is done you should have new servicer within 10-14 days after your last pymt.