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LLC, all rights reserved.
STUDENT LOANS AND YOUR CREDIT REPORT
In December of 2003, Sallie Mae lost a class-action lawsuit filed by borrowers who
had good credit. It seems that Sallie Mae had not been reporting to all credit bureaus.
Since student loans comprise the only credit history many young people have, the
failure to report was adversely affecting their ability to obtain home mortgages.
Lenders are now required to report to all credit bureaus, both adverse and positive.
When you miss a payment, your lender begins collection efforts. These efforts include telephone calls and letters. When you miss your second payment, the lender is
required to contact the guarantor on the loan. If you read the page on Student Loans,
you realize the government guarantees the loan. But the government contracts with private industry to re-insure the loan and provide collection services on Stafford loans. If they are unsuccessful in their collection efforts, they will be required to purchase the loan from the lender. So your lender sends the file to that company.
Each lender sets policy as to when they make the initial report to the credit bureaus, but they all report. And once the file is sent to the guarantor, the guarantor also reports. So if you are ninety days late on your student loans, each loan will show up as ninety days late on your
credit report. Twice. Once when the lender reports it, and once when the guarantor reports it.
Now let’s say you completed four years of college. That means you had eight loans – one per semester. But what if you had both subsidized and unsubsidized loans? Even if you’ve been paying the loans in a single payment, that still means sixteen loans. And if each of those sixteen loans is reported by the lender, and by the guarantor, that means thirty-two ‘lates’ on your credit report. Each month!
For more information about default and delinquency on student loans, read, “Surviving Your Student Loans”.
Student Loans and Your Credit Report :
Student Loan Topics:
Master Promissory
Note, Student Loan Deferment, Student Loan Forbearance, Student Loan Consolidation, Student Loan Discharge, Student
Loan Grace Period, Subsidized Student Loans, Unsubsidized
Student Loans, Stafford Student Loans, Perkins Student Loans, Direct Student Loans, PLUS Student Loans, William G. Ford
Student Loans, Student Loan Delinquency, Student Loan
Default, Student Loan Payment Options, Student Loan Case
Studies, Student Loan Management, Additional Reading Relating
To Student Loans, How Do I Get A Student Loan, How Do I Confirm
the Status of my Student Loans, Why Do I Owe Twice As Much As I Borrowed
On My Student Loans, Pending Changes Affecting Student Loans, Bankruptcy and Student Loans, Student Loans And Your Credit
Report, Student Loans, Gifts.
