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Student Loan Lates?

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Regular Contributor

Student Loan Lates?

SoI've been in the process of cleanup up my credit the past few years and am happy to say that just taking it slow and making positive changes has worked to an extent. I went from starting scores around 515 to 640s today. I have pretty much resigned to the fact that there is nothing I can do about the 7 student loans I have which defaulted way back in 2014/2015. They have have been rehabbed so they no longer report the default but 5 of them still show lates (the other 2 were removed interestingly enough). I called Nelnet to see if they could help out via a goodwill adjustment since this was 4 years ago with no success. I know the law says theres pretty much I can do on that front but I figured to give it a shot anyway. So my questions are:

 

If I just sit on them (they fall off March 2022?) how much impact will they carry on my score and history?

I have been declined in the past for credt for "Number of derogatory accounts". After next month, I will have successfully removed all of my collections (they all agreed to PFD), and will have taken care of the only other negative on my account.

 

I am concerned because this will still leave 5 accounts showing as negative (because they were all counted as small $2000 loans) for the next 3 years.

 

The other concern is that my understanding is that the loans will fall off at 7 years from original report of late. The issue with these loans is they all start reporting late at 90-120 days instead of 30 which means they will fall off that much later. Is there anything I can do about this?

 

TLSmiley Very HappyR:

How will having five four year old late student loans on my account impact my overall score (will it stop me from reaching 700?)

What can I do about them reporting original deliquency at 90-120 days instead of 30 (so they will fall off a little bit sooner)?

Starting FICO 8 as of 2 APR 2019

FICO 8 as of 10 OCT 2019

FICO 9 as of 2 APR 2019

Goal 700 across the board by 7/2021
Message 1 of 14
13 REPLIES 13
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Community Leader
Valued Contributor

Re: Student Loan Lates?

That's good you rehabbed. Your credit score will continue to improve. Sometimes in the process lates are removed. They ironically cannot Goodwill the lates because there law requires that federal student loans be reported accurately. Some students had success disputing the lates though. It is typical that those types of loans do not report until so late (so stupid, I know!). As for when they will be removed, that's a big question mark. From what I've been reading, due to the loan type it could be 7 years, 10 years or not until the loan is paid off. There are people in here who have them fall off at 7 so YMMV. I know that early Exclusions are for collection accounts but I had success with an open credit card account so it's probably worth a try. 2021 will be here before you know it though so no worries.

If you have collections that are still factoring into your score, the PFD should help. As for the denial of credit, the delinquencies may be a reason (or not), but could also but be the main or only reason. I have a major delinquency and I always get the code, but it doesn't affect me getting new credit. I would venture to say those collections were probably holding you back. With a higher score and an income source you should be good to go. There is a thread on rebuilding credit too. If you don't have a credit card or have a card with low limits, you'll need to build up. How is your profile besides the student loans?



Message 2 of 14
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Established Contributor

Re: Student Loan Lates?

I had success with removing lates from my student loans with Great Lakes but that was because of Retroactive Forbearance and honestly it was their fault that it had not been applied at the time (I had called in and requested it years back and something happened on their end, which they could see).
I say this because I understand how frustrating these lates must be and how helpless you may feel.

Personally, I would first focus on the low hanging fruit. I would worry about the PFDs you have for next month and see how much your scores improve over the next 30 days. Sounds odd, but it will build a confidence and I swear it's helpful to negotiate/ beg/request after you've tasted a little success.
Starting Score: EX 641 TU 631 EQ 669
Current Score: EX 714 TU 718 EQ 713 (EQ9 735)
Goal Scores: 750


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Message 3 of 14
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Regular Contributor

Re: Student Loan Lates?

my fico scores are just under 700 right now, despite 5 student loan accounts reporting 120+ days late around 14 months ago. Hope this helps!

FICO 8. EQ - 657. EX - 698. TU - 694
FICO 9. EQ - 689. EX - 673. TU - 683

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Message 4 of 14
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Legendary Contributor

Re: Student Loan Lates?

The Higher Education Act includes subsections that require reporting of delinquencies on certain types of federal student loans, and also exempts them from the normal exclusion provisions of the FCRA until the loan is repaid.

That means that the creditor/servicer cannot grant discretionary good-will deletions, and that they will not become excluded under the normal 7 year exclusion provisions of the FCRA until the loan has been repaid.

 

See sections 430A and 463 of the Higher Education Act for such provisions.........

Message 5 of 14
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Regular Contributor

Re: Student Loan Lates?

Op- did you consolidate the loans?

@RobertEG- does consolidating the loans and getting new trade lines count the original loans as paid off for the 7 years exclusion time?
Chapter 7 DC 10/23/18
Starting FICO 8 11/22/18

Current FICO 8 2/20/20

GOAL 680 by 12/19
Current FICO 9 12/28/19

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Message 6 of 14
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Legendary Contributor

Re: Student Loan Lates?

The requirement is that it be paid.

Consolidation or otherwise transferring the debt to another creditor/servicer does not pay the debt.

Message 7 of 14
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Community Leader
Valued Contributor

Re: Student Loan Lates?

"If you consolidate a defaulted loan, the record of the default (as well as late payments reported before the loan went into default) will remain in your credit history. Late payments will remain on your credit report for seven years from when they were first reported. "
https://studentaid.ed.gov/sa/repay-loans/default/get-out#loan-rehab



Message 8 of 14
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Valued Contributor

Re: Student Loan Lates?

@RobertEG. Thought I would revive this thread as something you mentioned in it stood out to me. So you are saying that discretionary good-will deletions would only be applicable to loans which where paid off?

I am currently contemplating a strategy to try and get several lates removed from (2) out the 3 CB's. My 7 year mark of the first student loan lates begins in May so would like to get an EE 😀

FICO08 Feb 2020 (TU 740) (EQ 740) (EXP 766)
FICO09 Feb 2020 (TU 782) (EQ 783) (EXP 785)
TCL $700K+
Message 9 of 14
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New Contributor

Re: Student Loan Lates?

My understanding is it’s 7 years from first missed payment if you had consolidated prior to default because the loans would be considered paid. If not then it’s 7 years from date of default or transfer to another agency
Exp - 847 TU - 838 EQ - 846
Message 10 of 14
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