Unfortunately, it’s not possible to remove your student loans from your credit report – well, not legally, at least! Furthermore, your student loans can be an excellent way to build your credit score, particularly in the early stages of your life. However, there are some things you can do to remove negative student loan information or avoid it getting on your credit report in the first place.
How to Get Student Loans Off Your Credit Report
Negative student loan information can stay on your credit report for seven years or more, and can do a lot of damage to your credit during this time. Thankfully, there are some situations where you can remove incorrect information about student loans from your credit report.
To Fix Errors
It can be difficult to remove negative student loans from your credit report, especially if they are private loans. However, if there is any negative loan information on your credit report that is incorrect or inaccurate, you can have this removed.
Information that you can have removed from your credit report includes:
- Student loans that don’t belong to you
- Incorrect late payments
- Incorrect default status
- Any negative information related to any loan that’s in deferment or forbearance
If you have any of this kind of information on your credit report, you should contact your student loan servicer as soon as possible. Make sure that you have supporting evidence handy to prove that the negative loan information is incorrect.
Default status can be applied in error for many reasons. For example, you could make all your payments on time, but a clerical error means that they’re applied to the wrong loan or not counted at all.
It’s important to address this as soon as possible, as any negative loan information, and especially default status, can be very damaging to your credit. However, you can only have incorrect information removed. Keep in mind that anyone offers to remove legitimate student loan information from your credit report, it’s probably a scam.
Write a Dispute Letter
In many cases, a well-worded letter will do the trick to remove negative loan information from your credit report. Sometimes, you’ll be able to arrange for incorrect information to be removed with a quick phone call, but it’s usually better to keep things in writing. This way, you’ll have a paper trail to keep track of your claim, making it easier to follow up or address similar problems in the future.
Your dispute letter should include:
- Your student loan reference number
- Your contact information
- A clear explanation of the issue with evidence, such as a copy of your credit report
- Evidence to prove that the information currently showing is incorrect, for example, your recent student loan statements and evidence of payments
- What you want them to do, such as correct the information on their records
- A request for written confirmation of receipt of your letter and written evidence that they have corrected the status of your account as well as given proper notice to the credit bureaus
As part of the letter, it’s also important to request that your student loan servicer contact the three major credit bureaus (TransUnion, Equifax, and Experian) so that these agencies also update their records to show the correct information about your student loans. Be sure to send your dispute letter via certified mail with return receipt requested. You should also follow up with the company within two weeks if you haven’t heard from them – you may need to keep chasing them to make things happen!
Finally, 30 days after your loan servicer confirms with you that they’ll update your records, double-check they’ve done so by pulling your credit report. If the three major credit bureaus are still showing the false information, you’ll have to get in touch with each of them yourself to set the record straight.
File an Account Dispute
If your loan servicer fails to notify the credit bureaus so that they can correct the loan information in your credit report, you’re best off contacting the bureaus yourself to straighten things out. You can do this by filing an account dispute that will force the bureau to review your file. Generally speaking, you should only do this only after you have already contacted your student loan servicer.
Here’s an overview of what you should do if you find incorrect student loan information on your credit report:
- Gather all the evidence you’ll need to back up your claims
- Call your student loan servicer to have them correct your records, or write them a formal dispute letter
- If you haven’t received written confirmation from your loan servicer within two weeks, follow them up
- Once you’ve had confirmation from your loan servicer, wait 30 days then run your credit report again
- If the incorrect student loan information is still showing on your credit report, contact the credit bureaus directly and file an account dispute
You’ll need to file a separate account dispute with each of the three major credit bureaus — TransUnion, Equifax, and Experian. Once the credit bureau receives your dispute, they’re legally required to investigate your claim with your loan servicer within 30 days. If your loan servicer confirms that the negative loan information is incorrect, the bureau will remove it from your credit record.
You may need to keep following up with both parties, but eventually, the situation should be resolved and the incorrect information will be taken off your credit report.
Reverse your Default
This one is only an option if you have a federal loan. Even if you default your federal loan, you might be able to reverse the default status and have it removed from your credit report by rehabilitating the loan. To do this, contact your loan servicer and they can arrange reduced monthly payments based on your income and other constraints.
To remove the default status you’ll then need to be on time with nine out of 10 consecutive payments, the default will be removed from your credit record. It’s also good to know that, even if you default on your loan, with federal loans you can lower your monthly payment to a small percentage of your income.
Unfortunately, this is not an option for private loans. In this case, the only thing you can try to do is refinance your loans with another lender, though it can be difficult to qualify if you have defaulted loans on your credit report!
Have Your Loans Forgiven
This is another method that only works if you have a federal loan.
Federal student loans have an in-built forgiveness clause, though it’s important to note that this only applies to certain loans. If you do have a federal loan, the remainder of your loan will be forgiven after 10 years of public service, either with a government agency or an approved nonprofit organization.
However, it’s important to note that you need to make your payments on time and in full throughout these 10 years to be eligible for this scheme.
Is it important to keep student loans off your credit report?
Having student loans on your credit report is not a bad thing. In fact, paying off your student loans on time can play an important role in establishing a strong credit score. However, negative student loan information on your credit report can be very damaging.
Having delinquent or defaulted loans on your credit report can have a hugely negative impact on your credit score. In coming up with your FICO score, payment history is the number one thing that credit agencies consider, as it demonstrates that you’re willing and able to pay off your debts. If you default or fall behind on your student loan repayments, this may suggest to other creditors that you may not pay them back either.
Along with damaging your credit rating, defaulting on your student loans can lead to other problems. If you default on federal loans, this could mean that the balance is due immediately, or you could be hit with substantial extra charges, adding to your loan stress. Defaulting on a private loan could prompt the lender to seek repayment from your cosigner or send your file to a debt collection agency.