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Error of student loan servicer destroyed my score

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Contributor

Error of student loan servicer destroyed my score

I’m new here and hoping for some guidance or help with an issue! I hope I posted this in the right place. If not I can move it! It came to my attention a few days ago that my student loans (10 of them!) were wrongly reported as missed payment starting in January 2018, even though I have evidence that Navient approved my applications for deferrals. This continued through September and then in September those loans were closed and Great Lakes / Ascendium opened new ones and automatically reported them as severely late (120+). This has continued until I found out. I found out because they wrongly reported my loans as defaulted and offset my tax refund.

Navient and Ascendium both have acknowledged that the emails from Navient that confirm my deferrals are enough to fix this, but I don’t even know where to start. This resulted in 10 loans each with 13 missed payments and now all 10 loans in collections.

How can I rebuild my credit? My current FICO 8 is now 598, with only 11% usage on one credit card that gets paid monthly. I just have the one card. I don’t have a car payment, or any loans.

What are the odds that they will fix 130 missed payments and delete 10 collection accounts, and what might that do for my credit score? Any advice on fixing this will be really appreciated.
FICO Scores
5/20/2019: EQ - 568 TU - 591 EX: 589
40 REPLIES 40
Established Contributor

Re: Error of student loan servicer destroyed my score

Others who have more direct personal experience dealing with these things should hopefully give you some specific advice on what to do next, but I have a few questions that may help people help you, by providing fuller information. 

 

First, when you say you have evidence that the deferrals were accepted, what exactly do you have? Is it in writing? Were there stated terms and conditions that they agreed to, in writing? And is there anything you were supposed to do by certain dates and times? 

 

Second, when you say that they have acknowledged this, do you have that in writing? And if so, what do they say they are doing next? Have they told you what their plan is? 

 

I think the ideal thing is if they can just go update their reporting from their end to mark  your loans as having been paid as agreed, that should eliminate all the late payments if they do that. And then you would presumably be able to challenge the collections on the basis that you were never late--and they might be able to do that as well. But for these steps I think others here with more direct personal experience can probably give you some specific advice. 

 

In any case I think you should start by trying to resolve this through the lenders themselves, and see if they will fix it. If they won't, then you would move on to disputing it through the credit bureaus--at which point you're going to need all the documented evidence you can get to make a strong case.


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Last Inq 04/2018
Message 2 of 41
Established Contributor

Re: Error of student loan servicer destroyed my score

It is likely weighing down your score a lot. Getting that loan(s) out of default would be a major boost to your score and getting the lates , removed would further boost it.
I've never been in this situation. I was close but I was able to file complaints up the chain until they were forced to fix their error before it defaulted.
I believe one of the worst things they are allowed to do is not report these loans as late until 90 days or later. I'm sure you didn't even have a clue that they were supposedly late until close to default. That's how it was for me.

Here is the complication of your situation imo. It is where it is now not just because they made a mistake, but because you dropped the ball a bit (not judging btw). You should have received notification of the impending default, etc. You could have seen the status of your loans when you saw your account online. So while I believe that you would have a strong argument that the situation was not your fault, I would also be prepared to ensure them that you did everything in your power to stop it from getting this far (or have a reasonable explanation ready as to why you did not). I'm only saying this because if this goes as far as filing a complaint with the Ombudsman or the Consumer Financial Protection Bureau, which helped me the most, you'll have to provide a detailed account of the situation, how you responded, etc. You'll need times, dates, names ideally and most importantly, anything you can get in writing. If you didn't get it in writing, then you can always call back, get the same answer then ask them to give it to you in writing. They sold also have a lot of your pay conversations with customer support they can provide to you.
The first step, you should decide if you want to keep your loans in default until they fix it or get them out of default while simultaneously trying to fix the problem. I don't have any suggestions on what would work best. If you decide you want to work on the default, I can walk you through that.

Since the cause of the default and the lates and the default was the missed Payment (s?) while you should have been on deferment (is that what you meant?), I would focus on that. You might have to do it in steps, such as getting the lates addressed before you can get the default addressed. It might be a losing battle to try to get your tax refund back at this point, but you could give that a try afterwards. If you cannot work with your servicers to get this corrected and are not getting anywhere with the credit bureaus, the next step I would go to the Dept of Education student loan Ombudsman. This can take a while and people have mixed results. The answer didn't hello me, so I filed a long complaint with the CFPB, with a ton of documentation. My servicer got back to me quickly after that and had an account specialist fix it ASAP.
Let me know if you'd like me to help you with anything or if you have any more questions.



Message 3 of 41
Contributor

Re: Error of student loan servicer destroyed my score

Hi Canadian in Seattle,

Thanks for the response. So what I have as evidence is emails from Navient sent the day after I applied for each deferment (July 2017 and again in July 2018) informing me that the applications were accepted. There was nothing I had to do after that.

In terms of them acknowledging this, I only found out about it on Thursday but spoke to a few people at Navient and each confirmed that these emails was sufficient proof that my loans were deferred and so I wasn’t missing payments. I wrote down their names and their employee ID numbers and I was told to write a letter and include my proof. They made it sound like this is going to be easy to resolve, and I hope it will be!
FICO Scores
5/20/2019: EQ - 568 TU - 591 EX: 589
Message 4 of 41
Contributor

Re: Error of student loan servicer destroyed my score

Hi Sabii,

Thank you also for your reply! You are right! I just checked my credit report and the first late was reported in January 2018 as 90 days late. Until I read your reply I didn’t understand why that was, because I assumed the first late payment was January 2018 and that they reported the months prior properly. I guess this means that they think I missed 90 days of payments in 2017 too.

I didn’t have a clue this was happening until my tax refund was offset. Every month I received emails showing my billing statement owing $0. By the time I found this out my loans were already incorrectly in default. To get a tax refund offset they had to be in default which 270 days with no payments.

After I received the notice from the Treasury Dept that my refund was given to Great Lakes / Ascendium, who I had never heard of, I set up an account and logged in. My online inbox had nothing about any of this in it. I did this before calling Navient and did start the loan rehab process because I thought somehow I had messed up and wanted to start fixing it immediately.

When I called Ascendium Friday they sent me mail, and that any mail they had sent me would be in my online inbox, and there was nothing. They verified that there was nothing in my inbox so I’m not sure if it either doesn’t get saved or they never mailed me anything.

They said they sent me the notice of intent to offset my tax refund on November 22, 2018 which would have given me 65 days to appeal, but I don’t recall receiving that. I may have missed it since I’d never even heard of Ascendium or Great Lakes (they changed their name from GL to Ascendium recently I guess.

Ultimately I’m not terribly concerned about the refund. I do owe loans and so if I don’t get that back, I’m alright with that. When I called Ascendium to try and figure this all out the girl said that I would have had to miss 270 days of payments to be in default and offset, so she is sending me an “administrative review form” to request a review of this. She said to include any evidence I have and she thinks it will be easy to get the offset reversed and then use that as a reason to get my loans out of default. That form was requested Friday and will mail out Monday. Once I return it they have 30 days to give an answer.
FICO Scores
5/20/2019: EQ - 568 TU - 591 EX: 589
Message 5 of 41
Contributor

Re: Error of student loan servicer destroyed my score

Ultimately my biggest concern right now is limiting further damage to my credit report. If Navient and Ascendium aren’t willing to correct things and I’m stuck with this, what is the best way to proceed?

Once I got the refund offset, I immediately start the loan rehab process to get them out of default (before I knew this wasn’t my fault), but that takes 9-10 months. When I talked to Ascendium, she said that until I complete the rehab process the loans stay “in collections” and those 9 ontime payments are not reported as such.

Does that mean they can keep reporting late payments?

Would it be best to wait and see how this shakes out or just consolidate these loans to get them out of default ASAP?

What I want to also avoid is just covering up all the damage by consolidating these. I eventually will consolidate so that if this or something similar ever happens again, i’ll only have one loan reporting not 10. I want all of those seriously late payments erased if possible, not just close the loans out. The first late on each loan is 90 days and then the rest are all 120, and it says the worst status or whatever was 149+ late. I don’t want this stuff there, especially not for 10 loans.

Does anyone have any guidance on whether to consolidate now or just wait and see? If I consolidate now to get out of default will that close the door on trying to clean up the damage? That is what the Ascendium person said.
FICO Scores
5/20/2019: EQ - 568 TU - 591 EX: 589
Message 6 of 41
Established Contributor

Re: Error of student loan servicer destroyed my score

I think the most of the damage has already been done, it's just a matter of fixing it.
Yes, you can start the process now to get out of default in addition to trying to get the error addressed. Unless you are needing a higher credit score soon,I wouldn't worry about your credit score. When you finish the default, it will improve. If you can get the error fixed and get your credit reports cleaned up in the meantime, your credit will bounce right back to where it was before all this. A small note, you should keep your balance on your card below 8.9% when the balance cuts for more points.
If you decide to get the loan out of default, I would read the paperwork very carefully. Imo you would probably want to avoid signing any document that admits the default is your fault, etc. Similarly, I believe the woman is correct and you want to stay away from consolidation.
With default,after you finish the payments the default will be removed from your record. Your accounts will be placed with a servicer again and you'll have a "new" tradelines that date back to the original dates, etc. The lates aren't guaranteed to be removed but some people have been successful in getting them removed. I strongly recommend this method to most people unless you have a great need to get out of default ASAP. Consolidation is quicker, but does not remove the default or the lates. It's also different in that instead of sending your loans back to your servicer you'll basically be getting a one brand new loan at 100% utilization I think she's right; even if you fix the problem, it won't matter because you signed for a new loan (in the wrong amount, btw, because it sounds like they'll have to reduce what you owe when they fix it). There is no undoing it. Additionally, any payments you made so far might have actually counted towards loan forgiveness (PSLF or other type like IDR). If you consolidate, it resets that count. Personally, I would keep the student loans as is and just rehab. When you rehab they can also use your financial information (income, expenses) to set your payments very low for those 9-10 months.

Back to the problem, when similar happened to me, at some point you may realize that you've gotten as far as you could with the servicer and the credit bureaus. Next step for me was creating the paper trail, what I had missed. I got way to many answers over the phone, not in writing. So a slew of emails & calls later I had customer service transcripts, letters, detailed bills and payment history for each loan, any email they had sent me, and anything in my servicer inbox. One phone call per issue and always ask for an account specialist for anything more than basic. Then I went to the student loan Ombudsman. It works for some people. When that failed I filed a complaint with Consumer Financial Protection Bureau. The CFPB complaint is what caused them to work with me to fix it. It took months to get there but it was worth it for a solution. Don't let the servicer's lack of cooperation get you down. That's what I think they count on.
Any questions?



Message 7 of 41
Contributor

Re: Error of student loan servicer destroyed my score

Wow, thank you! This is such great information! I really appreciate it! I can’t wait until this is all resolved and I can feel confident in my credit!
FICO Scores
5/20/2019: EQ - 568 TU - 591 EX: 589
Message 8 of 41
Established Contributor

Re: Error of student loan servicer destroyed my score

I'm glad I could help. Please feel free to ask if you have any more questions along the way and keep us updated.
A few more things. Don't trust their calculations when they fix it. It took me a while to do mine, but go back, calculate or look up what the loan actually should have been at the time of the deferment. You'll have to take into account the months in 2019 that you should have made payments, if the 2018 deferment was only for a year. That includes making sure they adjust it for any accrued interest and any capitalized interest.

When the fix is all done, keep a close eye on your account. For me the adjustment had to be manual which it turns out fixed the problem and caused another huge one because they entered the wrong number somewhere.

Another thing is that loans being deferred should be a last resort; instead the servicers hand them out like candy. IDR plans can be renewed early to accommodate financial hardships. Plus, when you have reduced payments it will towards your positive payment history on your credit report/ score. Just something to think about. (I wish I knew that all those times I deferred...my loans would be almost forgiven by now, ugh!)
Hope this helps.



Message 9 of 41
Contributor

Re: Error of student loan servicer destroyed my score

Ah great thinking! I didn't even consider the actual AMOUNTS, I just was worried about the negative reporting. However, you are right... the amounts matter too! What a pain in the behind student loans are. Half of mine are serviced by one company and the other half are serviced by another. I suppose the positive with this is that half of them were NOT messed up and were reported accurately, so at least there is that! It is just a bit confusing to me to look at my credit report and see SO MANY loans, all listed a variety of ways because they were bought / traded / whatever'ed multiple times leading up to this point. I think I need a spreadsheet or something to track everything.  

FICO Scores
5/20/2019: EQ - 568 TU - 591 EX: 589
Message 10 of 41
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