Since everyone in Washington is fighting over Student Loan Forgiveness, I'm gonna teach you the secrets to removing them from your Credit Report!
The good news is that there are several proven ways to remove them from Credit Reports, and I'm gonna explain them right now!
HERE'S HOW THIS RELATES TO US
Everyone who does Credit Repair knows that Student Loans have been a huge problem long before politicians started talking about "Forgiveness."
Student Loans are now one of the largest sources of consumer debt in the U.S., and they impact more than just the primary borrower. If the loan has a co-signer, their credit is affected the same way as the primary borrower – and in 2020, 92% of undergrad private Student Loans had a cosigner.
Forty-five million Americans - nearly one out of five adults - have Student Loan Debt.
Individual borrowers owe an average of about $39,000, and collectively, they owe $1.76 Trillion in Federal and Private Student Loans.
Student Loan Forgiveness is a hot-button issue because the Supreme Court is currently deciding whether or not to pass the Biden Administration's Forgiveness plan.
If it passes, the plan will wipe out up to $20,000 of Student Debt for the 26 million borrowers already approved for debt cancelation – and it will erase the entire student loan debt balance for 18 million Americans.
But if the plan fails, the U.S. Department of Education Undersecretary James Kvaal warned there could be a "historically large increase in the amount of Federal Student Loan delinquency and defaults..."
Roughly 10% of Americans have already defaulted on a Student Loan, and 5% of all Student Loan Debt is currently in default.
So buckle up, Credit Heroes. Whether this Student Loan Forgiveness plan passes or fails, millions of Credit Reports are about to change.
HERE'S THE THING TO REMEMBER
Student Loans affect your credit the same way other installment loans do. If you pay them back as agreed, it's great for your credit. But if you make late payments – or go into default and collections – it can seriously damage your credit and hurt your long-term financial health.
Student Loans live on Credit Reports for up to seven years, and they impact your Credit, whether you're the original borrower or the cosigner.
The good news is that there are ways to remove Student Loans from Credit Reports, and they're not as difficult as you might think.
The first step is to understand that there are two types of Student Loans: Federal and Private, and they report to the Credit Bureaus differently.
Federal Student Loans make up 92% of all Student Loan Debt, and they're easier to remove because the government subsidizes them. Federal Loans will report late payments to the Credit Bureaus after 90 days, and after 270 days, they will report the loan as defaulted.
Private Student Loans make up only 8% of all Student Loan Debt, and they're more difficult to remove from Credit Reports because they're not backed by the government, and they are riskier for lenders. Private Loans typically report late payments to the Bureaus after 30 days, and after 90 days, they will report the loan as defaulted.
Either way, these Student Loans will be listed on Credit Reports as delinquent until all the past-due payments are repaid.
At this stage, disputing with the bureaus or the furnishers is an option, but if the accounts are delinquent and still reporting late payments, deleting the accounts from the report will usually only be a temporary fix.
HERE'S WHY THIS IS IMPORTANT
It's temporary because the furnisher will usually re-report the past due Loan again and again. So a bandaid won't fix this. You need a long-term solution.
Most lenders have programs specifically for people who can't pay now but intend to pay in the future – once they find a job or get through some personal hardship. Sometimes this is the most viable option.
Federal Student Loan lenders have different repayment plans that allow people to pay less than required based on their income. This is a great option because lenders often re-age the accounts after a few on-time payments. And occasionally, they'll even remove the late notations!
Also, some Federal Loan lenders offer forgiveness programs where you no longer owe the debt. So, check if you qualify!
Federal Loan Lenders may also offer a Deferment, where payments are put on hold for months or even years. An example of a pause is the relief policy that stopped Federal Loan payments during the Pandemic…which is also scheduled to end after the Supreme Court makes its decision.
Private Student Loan lenders don't have forgiveness options, but they usually have refinancing and consolidation plans available to you.
If you or anyone you know is struggling with Student Loan Debt, the best thing you can do is help them get their accounts under control first, then move forward with a dispute strategy.
HERE'S WHAT YOU NEED TO KNOW
The secret to disputing a Student Loan is NOT disputing it right away!
Bruce Politano, the guru of Student Loan disputing, and one of our Millionaires Club Members, recently shared his proven dispute strategy with me. Bruce has helped thousands of clients with their student loans. He even teaches other businesses how to help their clients with student loans.
Because Private Loans are much less common than Federal Loans and circumstances vary greatly when negotiating with private lenders, the following tactics focus on removing Federal Loans.
STEP 1: Consolidate!
Federal Student Loan Consolidation means you have the Department of Education combine multiple old Federal Loans into one new Federal Loan.
When Federal Loans are consolidated, you basically create a new loan to pay off the ones. The old loans are then reported to the Credit Bureaus as "paid in full" and "closed." And when they're reported, they don't say they were paid in full through consolidation. They're reported exactly like it would if you mailed them a check and paid them in full.
You can find more info on Federal Loan consolidation at StudentAid.Gov.
STEP 2: Dispute!
Once the new consolidated loan is reporting, and the old problem loans are listed as "paid" and "closed," it's time to Dispute them!
As always, start by Disputing any incorrect information on the credit report. Student Loans are a common place to find errors. Closed accounts are often listed as open, Loans can be wrongfully listed under your name, and the same Loan can be listed multiple times. So be extra thorough!
Beyond that, the tactic that's provided most effective for Bruce is to dispute directly with the furnisher. This strategy often gets results because it uses Section 312 of the Fair and Accurate Credit Transaction Act, which states you have the right to dispute directly with the original creditor.
Here you would send a Debt Validation Letter to the original creditor and demand the promissory note. And you can download that letter for FREE at CreditRepairCloud.com/Dispute-Letters/Debt-Validation
A promissory note is the "instrument of indebtedness." So demanding the promissory note is a demand to see proof that you owe the debt, including the agreed-upon terms between the two parties, such as the maturity date, principal, interest, and issuer's signature. If they can't provide it, and they often can't, demand a deletion!
This two-step Consolidation and Dispute process works because Student Loans are hard to get rid of unless the borrower becomes current. That's why it's critical to get the loans under control first. Then you have a good shot at permanently removing the negative history.
MY FINAL POINT
Removing Student Loans can be difficult, but it's not impossible. All it takes to succeed is the right process and the right tools.
I'll end by saying…
If you don't already have a Credit Repair Cloud account, check it out. It's the software that most Credit Repair businesses in America run on. Just sign up for a 30-Day Free Trial at CreditRepairCloud.com/freetrial
And if you'd like to change lives and grow your own credit repair business, check out our Credit Hero Challenge!
It's an amazing program, and we've got another challenge starting in a few days, so grab your spot right now at CreditHeroChallenge.com!
So take care, Credit Hero!
Keep Changing Lives!