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Student Loan Rehab

Your FICO® Scores can impact your loan interest rates, terms, approvals and more.
Regular Contributor

Student Loan Rehab

I was going to pay my loan off in cash as it is about $2,700 but decided I want to save that money for a down payment on a house and going to get a side job to pay off my student loan instead, but wondering a couple of things.

 

1. My loan is about 10 years+ old so If I start the rehab process it should fall off my report since it is older than 7 years correct?

 

2. Since these loans don't really fall off until paid off, will removing this from report(has 90 & 120 day lates) and replacing it with a new fresh loan boost my score any or is it no longer factoring in my scoring since it is so old? I notice on Credit Karma it is on my credit report page but isn't listed under my "derogatory marks" so not sure how much it is still dragging down my score.

 

Thanks in advance!

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Message 1 of 6
5 REPLIES 5
Established Contributor

Re: Student Loan Rehab

1. You said rehab, so I'm going to assume it's a federal loan in default. It you rehab the loan, or just pay it off, you'll be making payments on it so it won't be removed. That's okay, this is a good thing because it's probably one of your older tradelines, right? Are there any lates that are recent?
2. Since you're going to be buying a home, you really should get a copy of a "real" score, FICO 8. There is free credit score.com by Experian with a monthly free score and report refresh. There is also free creditscorecard.com by Discover. And once every so often I get one from all three bureaus for $1 from creditchecktotal. Just cancel right after you download your scores and reports before you forget (14 day trial). Once you get your score and see your report you can see where to go from there. I'm not sure if the account will be removed just because you pay it off though, but if it were me, I agree, I'd rehab it first. I think they say you shouldn't apply for new credit a certain amount of time before you get a mortgage so you might want to rethink paying it off and getting a new loan before you do your research.



Message 2 of 6
Regular Contributor

Re: Student Loan Rehab

Yes, it is an old federal loan from Fedloan Servicing, but now on my report it looks like it went to Dept of Edu. I get my TU & EX FICO 8 scores from Discover & Experian.com but plan to pull scores for all 3 when I am ready to purchase. My FICO scores are slightly delayed though as I just got a 24pt boost on my Credit Karma FAKO scores due to my larger credit limit on my discover card so I am waiting to see what my FICO 8 scores do when they update next with my new limit.

 

I am leaning towards just doing the rehab too, I am hearing it goes back to when you defaulted and brings it all current and will keep my age of the account which is helpful since it is the oldest thing by a long shot on my credit report.

Capital One Platinum | $1,500Discover IT | $1,800Victoria's Secret Angel VIP | $500Citi Secured | $200
Message 3 of 6
Established Contributor

Re: Student Loan Rehab

I would try to figure out where it is since it sounds like it's on default. The NSLDS gov website should help. Contacting the collection agency might renew the debt, but the default is not going to look good if you're going for the mortgage.
Yes, if you Rehab then in about 9 months you'll have your aged account back with the default (not lates guaranteed but sometimes you get lucky) removed. Then you can make payments on it or just pay it off. That's a great idea. Again, if you pay it off, you'll be getting a new account for a loan which I don't think you're supposed to do. Might want to ask the mortgage thread about that. It might be better just to have more positive payments reporting on your loan. Interest probably isn't that much.
Look over your Experian report. Credit Karma isn't worth much. I would definitely get the $1 3 bureau report and score too because you can get another $1 trial later. Super cheap! The loan might look different or you might find errors on your reports and you should probably start fixing them now. Just an idea.



Message 4 of 6
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Established Member

Re: Student Loan Rehab

I am just getting out of rehab. I made my last payment in late Janurary for February which is the 9th month. I called Monday and was told the process of selling my loan started Friday 2-8. If you want I can try and update you with any updates I get.

Message 5 of 6
Established Contributor

Re: Student Loan Rehab

Yeah, that would be good. You really won't know what you have to get removed, if anything, until they get placed and show up on your report. Once you know who gets it, there are people who rehabbed with the same servicer here and you can get an idea if they removed the lates automatically or if they were successful with a dispute.



Message 6 of 6