I Recently Settled the Balance Due on My Private Student Loans. – Viet

“Dear Steve,

Hi Steve, I just recently settled on my private student loan for less than the total amount that I owe simply because I didn’t want to risk getting sued. The total amount was about $25,000.00. I currently have 4 credit cards, a car loan and 1 personal loan. 3 of my credit cards and personal loan are fairly new (opened this year, 2012),the other credit card was opened in 2005 and car loan in 2008 and never had any late payments. All of these accounts, I never made a late payment, always paid them on time. Although my credit score is poor due to delinquencies and collection accounts in the past.

I just want to know since I settled on my student loan and my credit score is going to drop because of that, how long will it take to bring my credit score back up? Will my good behavior on my other accounts help at all and how soon? Do you know by how much points my credit score will drop by settling a 2 year old student loan debt that was in collection?



Dear Viet,

Closing open collection items and the current reporting of positive credit use is the best way to rebuild your credit score.

It sounds like you are doing the right things.

Can you tell me more about the settlement? I’d like to know how much you owed, how much you settled for and who the lender was.

My only suggestion is that you should review your consolidated credit report to make sure the old negative items have been addressed.

Please post your responses and follow-up messages to me on this in the comments section below.


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3 thoughts on “I Recently Settled the Balance Due on My Private Student Loans. – Viet”

  1. Hi again Steve and thanks for giving me hope! So first off, Sallie Mae was the lender of my student loan and the actual amount was $23,222.00 and I settled for $9,500.00 in August.

    Yes, I have gone over all three of my credit reports and did indeed dispute a couple of negative accounts and got them removed. I currently have seven credit accounts that’s three years old (in collection.) The highest amount is about $1,500.00. Do you think that I might have a good chance of getting them deleted from my credit report in exchange for payment, PFD ? I’m gonna write to the CA’s and see if they’ll agree.

    And yes, I do have a CreditKarma account! =) I also am paying for the ScoreWatch on myfico.com. (Equifax)

    Well, thanks again Steve and hope you get back to me soon! Thanks!


    • I don’t think getting them removed is a worry. Old collection accounts count less as time moves away from them. The key is to deal with them and close them. If it was me I wouldn’t bother with that. Just focus on having two or three current accounts that report to the bureaus, credit cards, not store cards.


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