We see many student loans on the credit reports that we review.  Some are from students still in college, other loans are 10, 15, even 20, years old.  What we consistently see are inaccurate late payments recorded on the credit report, which are a derogatory item that hurts credit scores.

The most common problem seems to be when people submit their paperwork for deferment or forbearance and somewhere in the paper trail among the many companies that are involved in servicing student loans, a late payment of 60 or 90 days is reported to the credit bureaus, even though the official paperwork was submitted in a timely manner.  This appears regularly when the loan(s) are sold or transferred from one servicing agency to another.

Student loans that are not consolidated typically report each semester’s loan as a separate item with many consumers having 4 and as many as 12+ open loans in their credit file.  If each of these shows just two erroneous late payments, the compounded impact on credit scores can be severe.  Additionally, these late payments are usually reported as 90 or 120 days late.  In the credit score formula, a 60 day late payment hurts your score more than a 30 day; a 90 day is worse than a 60 day, etc.   As you can see, the negative impact on credit scores can be extreme.

WHAT TO DO
If you have student loans, or had them sometime in the past, check your credit reports.  Look at each student loan to see if there are any late payments listed.  If so, look at the dates the late payments are reported for.  If you know you were still in school or the loans were in deferment at that time, write to the credit bureaus for correction.

Remember, if you aren’t monitoring and correcting your credit, who is?  

For more information on Credit Building as part of your Financial Fitness, order your Credit Analysis today.