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Home > Reader Questions > I Didn’t Know My School Debt Had Been Sent to Collections. – Jordan

I Didn’t Know My School Debt Had Been Sent to Collections. – Jordan

I was unaware my school debt had been sent to collections. I called after I paid it off to see if they would remove it. They told me that they would not and that it would have to wait the full 7 years. It is telling me date opened 06/2011 and I paid it off in full on 08/2011. I was wondering if there was a corporation or someone that would help me remove it fee or not. I cant get a house and start my family because of this one mistake. Any suggestions on how to do this because I don’t want to buy a house in 2018 I want to get one now.

Thanks in advance.

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This is information that was submitted by a third party and not generated by GetOutOfDebt.org or Steve Rhode.
  • nylord1

    Dealing with the “system” and banks for school loans is so difficult. We are going through the same thing

  • Mr Owenr

    Hang in there Jordan, the negative credit is a bad deal but you should be able to raise it back up before 2018!  Stay strong!

  • Michael

    Hi Jordan,

    Negative items remain on your credit report for 7.5 years.
    You mentioned the date opened, but when did the account go delinquent? That will generally be the date you start counting the 7 year timeline from.

    If the only derogatory on your credit file is the missed payments on the student loan, and that account is now showing a zero balance owed, you in no way should have to wait to buy a home until 2018. Over time, and sometimes as little as a few months, your scores begin to improve after addressing a negative credit event. The key is for you to maintain positive trade lines you currently have and to strategically add new ones to round out your credit profile.

    What other credit have you established to date (credit cards, auto loans etc)?
    How long ago were these other credit products established?
    What is your current debt to income (DTI)?

    • Jordan

      I opened a credit card in 2009 and I have never missed a payment and always have paid it off in 30 days. Just this month opened another non secured student credit card. I have no debt to my name. No car loan, mortgage, etc.  I called one of the debt companies and explained my situation and they are removing one of the paid in full accounts off from my credit history. The other they will not remove due to it being a different company. Before getting one removed and opening that new card my fico score was 603. Should I open another credit card or wait another couple months before doing that? I use my credit card like my debit card due to the rewards and free stuff that I get for using it. I always make sure what I spend I actually have the cash for.

      Thanks

      • Michael

        Thank you for the additional detail.

        2 unsecured credit cards is sufficient.
        You would show better credit diversity with an installment credit product/fixed loan. A vehicle loan is a typical example.
        You have a skinny credit profile right now.
        The second card you opened recently will help your profile after the account is seasoned more.

        Some student loan debts are no longer reported negatively if they are brought current and maintained for 6 consecutive months. I am not sure if you have one of those products.

        If all negative entries are paid off at this point, what you really need is time. Generally speaking, and given the information you provided, you should see marked improvement to your score over a 6-12 month time frame and more improvement after 2 and 3 years time separation from having resolved a negative reporting event, while maintaining the other credit you have.

        With a healthy debt to income ratio, credit utilization under 30%, and a down payment of 5 or more percent, you have a good shot at qualifying as a first time home buyer with FHA underwriting with a 620 (there are instances where a lower score will still pass underwriting).

        Best of success to you!

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