Jan. 17, 2009
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 goes into default, your account is turned over to collection agencies and various collection procedures begin. In addition, the government can garnish your social security benefits, your wages, and more.
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.
A dispute letter should be sent to each bureau containing a reason as to why the mark is not correct. Examples may be the account is paid in full, the mark has already been reported for seven years, not my account, and so forth.
Since this is the most difficult item on a credit report to negotiate, 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. Also, there are new laws passed constantly 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.
Understand that government loans, such as a Stafford loan or the Perkins loan, will be much harder to eliminate from your report. A private loan, such as Sallie Mae, will be easier to remove than a federal loan, but still difficult.
The creator of the negative mark will be contacted by the bureaus and asked to verify the debt, including that the account is yours, the balance of the account, and that the dates are correct. This will take place as soon as the bureaus receive your credit dispute letter .
The Fair Credit Reporting Act states that any unverifiable mark on your credit report must be removed. Therefore, if the account can not be verified, the negative mark must be removed from your credit report.
It is estimated that 1 in every 4 people have an error on the report that is costing them money in higher interest rates. The bureaus and lenders make errors all the time, but your credit is the one that will suffer. If this mark is in error, be sure to send any documentation that you have with your dispute letter to prove it is in error.
In conclusion, defaulted student loans are removed every day from credit reports. If you have this, it does not mean you will have a low credit score for the rest of your life. We suggest you dispute this mark with the credit bureaus.
For a free credit consultation call 1-866-246-7311.
Additionally visit us for more about Defauted Student Loan or to learn how to remove charge offs from your credit.