As the economy slows down, more and more people are struggling to pay their student loan debt. Although defaulting on student loans should be avoided at all costs, sometimes default is inevitable. Luckily, the U.S. Department of Education provides a method by which people who have defaulted on student loan debt can repair their credit and have the default removed from their credit report.
Both late payments on a student loan and student loan defaults will appear on your credit report. However, student loan defaults are also registered. A registered default can prevent you from receiving any kind of federal assistance while the default is in place. Assistance you may miss out on includes further help with school and federal loans for buying a house.
You can have a student loan default removed by following the Department of Education’s credit rehabilitation program. The program helps students fix their credit and get out of default. When you enter the program, the Department of Education will work with you to set a monthly payment on your student loans. You complete the program by making nine consecutive months of payments.
Once the nine months are over, you are entitled under the Fair Credit Reporting Act to have any information about the student loan default removed from your record. You will also be able to apply for federal assistance, as well as forbearance or deferral on your student loans if you hit another difficult period. Any late payments you made on your student loans, however, will stay on your credit report for seven years.
The student loan default rehabilitation program is only available once to each student. Once you’ve completed it, you will not be able to go through it again should you default on your student loans a second time. For this reason, it is crucial that you stay up to date on your student loan payments and seek help by requesting a forbearance or deferral if you need one.
Also, once the default is removed from your credit report, you should see an increase in your credit score, also known as your FICO score. Fixing your credit score in other ways will also help your score improve.
If you have been victimized by a debt collector or have items on your credit report that are incorrect, call or email Attorney Gary Nitzkin for a free consultation at (888) 293-2882. For more information about your credit rights as a consumer, visit our blog at www.micreditlawyerblog.com. Visit our website at www.micreditlawyer.com.
