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fightingillini

Question About Student Loan Negative Item

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So back in 2008 I cosigned a US Department of Education PLUS student loan for my mother, (it was taken out for my sister not me) that later went 120 days delinquent in 2013.

 

Since then the loan has been consolidated and transferred to another provider, but the negative 120 day item is still showing up on my Equifax and TU credit reports and is lowering my score.

 

I cosigned the loan during a time in which I was hospitalized and my mom took advantage of that, but that's a different story. I don't want to bring up issues of fraud or anything, but is there another way that I could possibly get the item removed? Why is it still reporting all these years later even after the loan has been transferred to another provider?

 

I sincerely appreciate any help on this as I'm trying to buy my first home and this could be a detriment.

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Most negative information reports for seven years.  

 

Were the loans ever rehabbed, or were they consolidated?

 

Is the information that's reporting 100% accurate?  

 

Have you been told that you can't get decent mortgage terms with this reporting?  If yes, by whom?

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57 minutes ago, cv91915 said:

Most negative information reports for seven years.  

 

Were the loans ever rehabbed, or were they consolidated?

 

Is the information that's reporting 100% accurate?  

 

Have you been told that you can't get decent mortgage terms with this reporting?  If yes, by whom?

The loans weren't rehabbed as far as I know, but yes they were consolidated and transferred to another provider outside of the US Dept of Education.

 

As far as I can see, the information they are reporting is accurate - there was a delay on payments that year but I'm not 100% sure if it was 120 days, I'd have to check with my mother on that.

 

I have not been told that I won't be able to get decent mortgage terms with the reporting. However, I haven't shared my credit report with a lender yet.

 

My credit score for TU/Equifax is lower than Experian because of the negative item. The Experian report doesn't have the item listed.

 

I should also mention that it is listed as a closed account on my credit report.

Edited by fightingillini

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12 minutes ago, fightingillini said:

The loans weren't rehabbed as far as I know, but yes they were consolidated and transferred to another provider outside of the US Dept of Education.

 

As far as I can see, the information they are reporting is accurate - there was a delay on payments that year but I'm not 100% sure if it was 120 days, I'd have to check with my mother on that.

 

I have not been told that I won't be able to get decent mortgage terms with the reporting. However, I haven't shared my credit report with a lender yet.

 

My credit score for TU/Equifax is lower than Experian because of the negative item. The Experian report doesn't have the item listed.

 

I should also mention that it is listed as a closed account on my credit report.

You can (and should) buy your own mortgage FICO scores so you know where you are.  

 

Note that mortgages use different FICO scoring models than the FICO scores that most of us see with any regularity.  Since the top end of these score models is < 850, for many people the mortgage FICOs are lower than they expect to see.  You can't "estimate" your mortgage FICOs based on some other score that you have, though, hence my suggestion above.

 

With your mortgage FICO scores in hand, call up a mortgage company and talk through your scenario, and you should get honest feedback about where you are and what you need to do.  I would be surprised if these old SL lates would prevent you from getting a mortgage at this point, especially if they're your only negatives.

 

Here's a thread about mortgage FICO scores to get you started.

You still can and should also try to get the lates deleted if you can.  

 

Have your paper reports mailed to you from each of the bureaus and dissect every detail of the SL trade lines trying to find errors. If you find any, read up on the dispute process and head in that direction.  If you find no errors, post that update in this thread and you may get other suggestions.

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1 hour ago, cv91915 said:

You can (and should) buy your own mortgage FICO scores so you know where you are.  

 

Note that mortgages use different FICO scoring models than the FICO scores that most of us see with any regularity.  Since the top end of these score models is < 850, for many people the mortgage FICOs are lower than they expect to see.  You can't "estimate" your mortgage FICOs based on some other score that you have, though, hence my suggestion above.

 

With your mortgage FICO scores in hand, call up a mortgage company and talk through your scenario, and you should get honest feedback about where you are and what you need to do.  I would be surprised if these old SL lates would prevent you from getting a mortgage at this point, especially if they're your only negatives.

 

Here's a thread about mortgage FICO scores to get you started.

You still can and should also try to get the lates deleted if you can.  

 

Have your paper reports mailed to you from each of the bureaus and dissect every detail of the SL trade lines trying to find errors. If you find any, read up on the dispute process and head in that direction.  If you find no errors, post that update in this thread and you may get other suggestions.

Thank you so much for the advice, I'll do these steps and post an update on what I find on the trade lines.

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Without rehabbing, the delinquent data stays for as long as the original lender wants to report, or until the statutes expire, whichever event occurs first.  The sale/refinance of the note does not mean the original lender has to stop reporting.  When one co-signs a student, they get none of the benefit and ALL of the blowback when the irresponsible party shows their irresponsibility.  There is a reason the borrower could not get the loan on their own...

 

Goodwill rarely works on a student loan.  But that is about the only option that might exist here outside of waiting for the info to age off.

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Update: I got a paper credit report from TU (not Equifax so far) and had questions about the information being reported because it was from so long ago and I was out of state in 2013 and had no idea there was even a late payment issue. 
 

I called a few numbers for the Department of Education to try to get more basic information - they are the original lender and the ones reporting the negative item, which is a 120 late from April of 2013. The PLUS loan was cosigned in August of 2008. The current loan holder is not reporting anything.

 

The reporting agency is DIRECT LOAN SVC SYSTEM - in Greenville, TX.

 

They all gave me the runaround and no helpful info, the first one gave me irrelevant info about my student loan which is in good standing and said that there is NO co-signed loan on my records.

 

The second one was equally unhelpful and gave me the contact information for the current holder of the co-signed PLUS loan, American Education Services - they are NOT reporting anything negative, or even a loan for that matter, it is only the DIRECT LOAN SVC SYSTEM. 

 

The third number I called (listed under DIRECT LOAN SVC on my credit report) redirected me to Lexington Law services, and another person hung up on me without saying a word (great service!).

 

This is frustrating because there's no information about whether or not a retroactive forebearance was attempted or any type of loan rehab. And there's no point in asking my mother about it, her records are a mess and there's no way she will remember.

 

So I am wondering, first of all, should I mail  a debt validation for this item to see if they even have the proper records for it? 

 

Or should I start with a Goodwill letter or something else? It seems like their records are shaky at best and they may not even have the information from the original cosigned loan since it was so long ago and the loan was transferred, not just once I think but twice.

 

Thank you!

Edited by fightingillini

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To get the best advice (some of which may not relate to the student loan), order the 3-bureau score report from myFICO.com that was suggested earlier in this thread.  Citing from mendelssohn's excellent post, the mortgage scores that you're interested in are:

 

On 8/15/2016 at 11:22 AM, mendelssohn said:

A; The predominant scoring models and ranges are:

  • Experian: FICO 2 (EX 98) 320-844
  • Trans Union: FICO 4 (TU 04) 309-839
  • Equifax: FICO 5 (EQ 04) 334-818

It's important, up front, to know where your mortgage scores stand (and the degree to which the delinquency is hurting you).  btw, is this the only adverse information reported on your report?

 

Ok ... so the hard truth is that the Dept of Ed is uninterested in updating accurate reporting, no matter the underlying circumstances.  Since you don't intend to raise a fraud claim, I don't expect any efforts to remove the adverse data to be fruitful.

 

Hindsight being 20/20, "Ed" has an excellent rehabilitation program through which delinquencies can be brought current and adverse information removed, but the window closed on that when the loan was transferred to another lender.

 

I'll keep my fingers crossed that the age of the adverse information is sufficient to keep your scores in the 600's (and there's a decent chance of that, provided there aren't more recent derogatories of any type).  In that case, you won't be eligible for the best rates, but certainly can be approved at rates that are quite acceptable. 

 

When the adverse info ages off in 2020, you can consider whether there are sufficient savings to refinancing to warrant it.

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