Frequent Contributor
atarvuzdar
Posts: 375
Registered: ‎01-20-2012
Consolidating Student Loans

Hi all,

 

Friend of mine has a horrible credit file filled with a LOT of lates and CO's. I took a look at his EQ report and he's literally got 7 Nelnet loans and about 10 Sallie Mae loans reporting, as well as a Nelnet/Suntrust SL. He went through a really bad patch and is just getting back to good this year, but all of the lates on EVERY one of his student loans has absolutely killed his score. Looking at his report makes me hyperventilate because it just looks like no amount of good he does could make up for so many accounts reflecting 120 days late at various times over the past four years.

 

If he were to consolidate his loans would that cause them to just be reported as one tradeline for all the loans that were consolidated? I'm thnking that if this is the case that he could consolidate, all of his current student loan tradelines would report a $0 balance and paid in full and he would wind up with just one or two new tradelines for the consolidated loans which would (hopefully?) show a completely positive history, starting from the time the loans were consolidated going forward.

 

Is this possible? It really just seems that otherwise he's looking at a LOOOONG road to climbing out of the low 500's even though he's now current on all of those tradelines.

 

Thank you all!

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SCF
Posts: 1,080
Registered: ‎06-09-2008
Re: Consolidating Student Loans

Are they federal loans?  With those lenders, some or all of them may well be.  I would reccomend that he looks into rehabilitation first.  You can search these forums for all kinds of information and experiences, but long story short, you work out a 9 month payment plan on the defaulted loans, make good on it, and then get new, clean tradelines for each loan.  After that, the loans are eligible for consolidation and other federal benefits (like the Income-based Repayment plan, and deferrments, etc.).

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webhopper
Posts: 7,230
Registered: ‎09-16-2011
Re: Consolidating Student Loans

SCF wrote:

Are they federal loans?  With those lenders, some or all of them may well be.  I would reccomend that he looks into rehabilitation first.  You can search these forums for all kinds of information and experiences, but long story short, you work out a 9 month payment plan on the defaulted loans, make good on it, and then get new, clean tradelines for each loan.  After that, the loans are eligible for consolidation and other federal benefits (like the Income-based Repayment plan, and deferrments, etc.).


+1...  This will be the quickest way for his credit file to recover from the damage done by the student loans.

 

I myself had 8 different SL tradelines. I completed Consolidation in 2007, Granted, none were ever late, but the consolidation made it easy to pay on time every time, because it was just one bill, instead of a bunch of different bills.


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Sonic98
Posts: 96
Registered: ‎09-04-2012
Re: Consolidating Student Loans

I have loans with Sallie Mae, and they are all in deferrment currently. I've had a couple defferments before this one and a forbarance. They reported some of the loans as negative when they were supposed to be in either deferrment or forbarance. Sallie Mae won't correct it and the berueas are not updating after disputing. The loans list on my report as 5 positive and 15 negatives. That ratio might be slightly off, but it's close to that. I recently applied to consolidate my loan, but I was thinking I should probably remove the ones that are showing positive from the consolidation. How does that sound?

New Contributor
Sonic98
Posts: 96
Registered: ‎09-04-2012
Re: Consolidating Student Loans

Well, maybe I have no reason to consolidate at all

New Contributor
Sonic98
Posts: 96
Registered: ‎09-04-2012
Re: Consolidating Student Loans
[ Edited ]

Well, maybe I have no reason to consolidate at all. I'm assuming that consolidating those negative loans into a new loan would do me no more benefit than paying off a collection. From what I'm reading paying off installments doesn't do much for your credit anyway.

Regular Contributor
igids1
Posts: 191
Registered: ‎07-05-2012
Re: Consolidating Student Loans

Rehabbing is probably where to start, but just to clairy, sucessful rehabilitation does not automatically guarantee that you get fresh new positive tradelines. Some of the lenders will do this upon request. But rehabilitation will just remove the default status. Additionally, if they are 4 years old, they will start to fall off in a few years. If he remains current, paying on time, rehab etc, his scores will rise. Nothing will fix this immediately though. Its going to take 12-24 months, unless they do delete the lates after a rehab, in which case he is still looking at 9+ months. Theres no magic solution here.

New Contributor
Sonic98
Posts: 96
Registered: ‎09-04-2012
Re: Consolidating Student Loans

Doesn't your loan have to be in default to rehab?

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SCF
Posts: 1,080
Registered: ‎06-09-2008
Re: Consolidating Student Loans

Sonic98 wrote:

Doesn't your loan have to be in default to rehab?


Yes, you have to default before they will offer rehabilitation.  If you haven't defaulted, the best plan is to find a way to bring the loans current, and make sure you can keep them current (whether that's by applying for a new payment plan, adjusting your budget, or some other way).  Then, you can send goodwill letters to the lender in the hope that they might remove one or more of the lates.

New Contributor
Sonic98
Posts: 96
Registered: ‎09-04-2012
Re: Consolidating Student Loans

Right now they are current. They had been current before they went into defferment.  They're all through Sallie Mae and one payment that I can afford once they come out of defferment. I was just wondering if there was any benefit to consolidating the ones that had been listed as negative on my credit. They're listed as either deffered or paying as agreed,  but they still show up on the negative section of my reports