One of the reasons your credit score is important is that creditors and lenders rely on it to determine whether you qualify for new credit or loans. Many student loan borrowers worry how their loans will impact their credit. If you are making reduced payments through an approved repayment plan, your credit score will not be negatively affected. It should be a priority to make your student loan payments on time to help improve (or at least maintain) your credit rating.
Falling behind on your student loan payments or allowing your loan to go into default status will result in significant harm to your credit score. Your student loan lender, federal or private, is required by law to provide the credit reporting bureaus with information regarding the payment status of your loans. Most lenders will report your delinquency after your student loan is 60 days or more past due. Additionally, all collection efforts, payment information, and the date your loan is paid or discharged will be disclosed.
If you have a Direct Loan, your default will be noted on your credit report as being in collections. If you have a FFEL loan, your default will be listed as a claim being paid on the account. The guaranty agency will report the default 60 days after they pay the claim. Default on a Perkins Loan will continue to be noted until you pay the loan in full.
If you are worried about being able to make the payments on your student loans, you should consider rehabilitating or consolidating your loan. It can provide you financial relief while protecting your credit score and preventing the harm caused by defaulting on your student loan. A rehabilitated federal loan can even remove the default notation from your credit report. A consolidated loan will show the payment status of the new consolidated loan. However, the negative history on the old loan will still appear on your report.
The “defender of the little guy,” DeLadurantey Law Office, LLC, handles student loan debt and bankruptcy matters (Chapter 7 and Chapter 13) in Milwaukee, South Milwaukee, West Milwaukee, and Milwaukee County, including the municipalities of Bayside, Brown Deer, Cudahy, Fox Point, Franklin, Glendale, Greendale, Greenfield, Hales Corners, Oak Creek, River Hills, Shorewood, St. Francis, Wauwatosa, West Allis, and Whitefish Bay. The firm also can handle your debt negotiations, debt relief, and mortgage loan modifications. Contact DeLadurantey Law Office, LLC by phone: (414) 377-0518. Like us on Facebook.