How long to show as paid on credit report?

[Anonymous]

I have a Sallie Mae loan in default that went to a collections agency. I made arrangements last year for a monthly payment, which I've been paying on time and in full for about a year now. I'm now trying to qualify for a USDA mortgage, and this loan is causing problems since it was a federal loan. Does anyone have any experience with this? The mortgage loan officer said that if I provide paperwork showing the transfer from Sallie Mae to collections, and a record of on-time payments, that it might not be a problem. One option might be to offer to settle with the collections agency and pay it off in full. Does anyone know how long it would take for my credit report to reflect that I've paid it off?

[Anonymous]

The problem is even though you are making payment the loan is still in default.  Based on the guide lines, If you are attempting to obtain any Federally backed Mortgage, FHA/VA/USDA, a defaulted Federally Guaranteed Student Loan will automatically disqualify you. Showing that you are making payments might work but there is no grantee.

Also even if you paid of the collection agency in full, the default will still remain on your credit report for 7+ years.

I would recommend doing the following:

1. See if there’s an option to rehabilitate the loan. If you can this would be your best option it will get the loan out of default and help your credit.

2. Check to see if you can consolidate, this will also take the loan out of default, but your credit will still be damaged, but with time you can bring it back.

[Anonymous]

Thanks for the reply. I did do a rehab program, after which point the loan was sold to Reliant Capital Solutions, who are the collections agency I'm paying now. does that make a difference?

[Anonymous]

If your loan was rehab, you should no longer be dealing with a collection agency, becasue the loan is sold and it becomes a new / clean loan with no dings unless you start paying late again.

Reliant Capital Solutions is a collection ageny so if your loan was rehab sucessfully it should not be sold to them. Who was the loan rehab through, when my Sallie Mae loans went into default they were turn over to the Deparment of Education. Once I completed the rehab the loan was sold to Edfinancial.

I would recommend going http://www.nslds.ed.gov this site will allow you to see all your federal student loans, you can also see what loans are still in default.

It is a pain I was in your shoes a feew months ago.

[Anonymous]

Thanks! I did get it figured out; now just waiting on a letter from Sallie Mae and the new owner showing that the loan has been rehabbed!

[Anonymous]

Good the see that you are getting it worked out. So what did you find out and what was the story with Reliant Capital Solutions.

[Anonymous]

Well, it took me two days of phone calls, but I finally figured out that the private student loan that was sold to Reliant is not showing up on my credit report. What is showing up is six loans from Sallie Mae that went into default and were bought from SunTrust Bank. I've been paying them through American Education Services through the federal government's Income Based Repayment plan.

The six Sallie Mae loans that are showing on my report as being in default have been rehabbed and are out of default, according to SunTrust Bank. They said that they sent me a letter awhile ago that said that the loans were out of default, but I can't find it anywhere, so they're sending me a new one. As soon as I have that, I'm going to call the three credit bureaus and have them remove the incorrect information.

Man, this is a lot of work, but I know it will be worth it to get those negatives off of my record!

[MattieNumNums]

It takes a while. I finished my rehab and it took 6 months for it to effect my score. In fact it just hit today My score went from 574 to 638. Every month I disputed the Sallie Mae loans and they finally fixed it. You have to hound Sallie Mae.

[Anonymous]

@mattie, congratulations!

thanks for the advice, i will hound them every day

[MattieNumNums]

Don't bother calling either because it gets you nowhere. Good Luck! Just be diligent and keep the faith!