If you have defaulted on your student loan, you will likely to have to repay this debt and your credit will be ruined. This will put you in a difficult position.
When your student loan is in default, the government can garnish your wages, your social security benefits and more. Your account is sent to collection agencies and various collection efforts begin.
These debts can be collected upon for life! However you can only have a negative mark on your credit report for a maximum of seven years. This is according to a law that Congress created called the Fair Credit Reporting Act.
If you have a defaulted student loan on your report you are likely to have to pay interest rates of roughly 25% and place large down payments, just to be approved. More often than not you will be turned away for a new line of credit.
However there is hope you can remove this mark from your report and with some luck you may be able to remove the debt entirely. In order to do this you should dispute the collection marks on your report.
You should send a dispute letter to each bureau; in your letter provide an explanation as to why the mark is not accurate. For example; it has been reported for seven years already, not my account, account is paid in full and so on.
This is the most difficult item on a credit report to negotiate. As a benefit to you, we suggest that you hire a credit repair service to dispute it on your behalf. This will give you a licensed attorney fighting for you which will be knowledgeable of the new laws constantly passed by congress to help protect consumers.
Hiring an expert can be done at very reasonable rates and, compared to the high cost of a low credit score, is a good idea. We feel it is worth the money since your credit score impacts every aspect of your life.
Please be aware that a private loan, such as one with Sallie Mae, will be difficult to remove but easier than a federal loan. A loan from the government, such as a Stafford loan or the Perkins loan, will be much harder to remove from your report.
When the bureaus receive your dispute letter they will contact the creator of the negative mark and ask them to verify the debt. They will verify that the account is yours, the dates are correct, and the balance of the account.
Due to the Fair Credit Reporting Act stating that any unverifiable mark on your credit report must be removed, the negative mark must be removed from your credit report if the account can not be verified.
If this mark is in error then send any documentation that you have with your dispute letter to prove it is in error. The bureaus make errors all the time and so do the lenders, but your credit is the one that will suffer. It is estimated that 1 in every 4 people have an error on the report that is costing them money in higher interest rates.
In closing, if you have a defaulted student loan on your credit report, it does not mean you will have a low credit score for the rest of your life. Defaulted student loans are removed from credit reports every day. To do this, we suggest you dispute this mark with the credit bureaus.
If you would like to make a comment, please fill out the form below.
