In A Nutshell
Generally speaking, you can’t remove a student loan from your credit report. However, your student loan lender must correct any inaccurate information on your credit report, and it’s possible that correcting these errors could help boost your score.
Impact of Student Loans on Credit Report
Falling behind on a student loan can seriously damage your credit score and make it hard for you to qualify for credit in the future. If you’re in danger of defaulting on your student loan, it’s a good idea to reach out to your lender, as you may qualify for a deferment or forbearance that can give you the time you need to get on a more stable financial footing.
Defaulting on your student loan can drop your credit score by 100 points or more. The lead-up to defaulting can also lower your score between 50 and 90 points, as it’s likely you’ll miss several payments before defaulting.
If you have federal loans, your loan goes into default after 270 days of no payments. In some cases, the lender or servicer will call your loan due in full once you default, which means you must pay the entire balance right away.
Your lender may also send you to collections, which can cause you to rack up additional fees and interest. If you have federal student loans, the government can withhold social security benefits, tax refunds, and other federal benefits until you’ve paid your debt.
The Department of Education considers a student loan delinquent the day after a borrower has missed one payment. Federal student loan servicers begin reporting late payments after 90 days, whereas private lenders may report as early as 30 days.
Because your payment history makes up 35 percent of your credit score, it’s critical to always pay your student loans on time. Even one 90-day late payment can drop your credit score by 20 points or more.
How Long Do Student Loans Stay on Your Credit Report?
Student loans will remain on your credit report for up to seven years. However, you should be aware that just because the loan drops off your credit report doesn’t mean you’re off the hook for the debt.
Currently, there is no federal student loan forgiveness program for defaulted loans, nor is there a federal statute of limitations for unpaid student loans. As long as you have a federal student loan balance, you owe the money indefinitely even if it’s no longer on your credit report.
If you have a private student loan, it should drop off your credit report after seven years, although some private loans can stay on your report for up to 10 years. Unlike federal student loans, however, private student loans have statutes of limitations that vary by state, with most averaging around six years.
Cannot Legally Remove Most Loans from Credit Report
In general, there is no way to remove a student loan from your credit report as long as the servicer or lender is accurately reporting it. This is true for both federal and private student loans.
However, there are limited exceptions, including inaccurately reported information and a loan that’s being reported as unpaid even after you’ve paid it off.
Inaccurately Reported Information
If your information, such as your name and social security number, is inaccurately reported, you have the right to dispute the loan with your lender, which is required to correct the information. For example, if the loan balance is wrong, this is something worth disputing, as it could negatively affect your credit score.
You can file a dispute through the mail, over the phone, or online. If you find an inaccurate item on your credit report, keep in mind that you’ll need to check all three reports — Experian, Equifax, and TransUnion — and dispute the item with all three bureaus separately.
Paid Loan Off But Still Showing Up
If you paid your loan in full, you should file a dispute with the credit bureaus and the lender. Unfortunately, paid or closed accounts can sometimes pop up again on your credit report — something that’s true for any kind of credit account, whether it’s a credit card or a student loan.
If you paid off your student loan but it still appears on your credit report, you should file a dispute the same way you would dispute any other kind of account. When you file your dispute, make sure to include proof of your payment, such as documentation from your lender or loan servicer.
How to Remove Student Loans From Credit Report
You probably can’t get a student loan removed from your credit report, but you can dispute a student loan if it’s being inaccurately reported. There are several different scenarios you might encounter with respect to an inaccurately reported loan.
While in School
With many student loans, including federal loans, the borrower isn’t required to pay on the loan as long as they’re enrolled in school. Nevertheless, some borrowers may see a late payment on their credit report, which can be a shock if you thought you weren’t obligated to pay.
If this happens, you should file a dispute with the lender and the credit bureaus. You’ll need to provide documentation showing that you’re enrolled in school, which should prompt the lender and the credit bureaus to remove the negative item from your credit report.
Inaccurately Reported Payment
Sometimes, despite your best efforts, a lender will report an on-time payment as late. If this happens, the dispute process is the same as in any other situation. When you file your dispute, include proof of payment and any other documentation showing you are up to date on your loan repayment.
If your loan has been deferred or you obtained a forbearance, your lender should have stopped reporting your loan payments as late. However, lenders sometimes make mistakes and continue marking payments as past due.
If this happens, you should dispute the negative items and include proof that your loan is in deferment or forbearance.
Closed Loan Account
With student loans and other types of credit accounts, a closed account may suddenly appear on your credit report as active or open. If this occurs, you should dispute the account just like you would any other mistake or inaccuracy on your credit report.
Improving Your Credit Score After Student Loans
Defaulting on a student loan or falling behind on your payments can seriously damage your credit, which can make it tough to get a job or even rent an apartment. When you’re a new grad and trying to establish yourself in your career, you don’t want a bad credit score holding you back.
If a bad experience with student loans has lowered your credit score, there are several proven strategies for rebuilding your credit. Here are some time-tested methods for making it happen.
- Lower your credit utilization – Your credit utilization is the ratio between how much available credit you have versus how much credit you’re using. Ideally, you want this number to be below 30 percent. Your credit utilization makes up 30 percent of your credit score, so it’s a key factor in determining your score. You can improve your utilization rate by paying off debts and sometimes even opening a new credit card to expand your amount of available credit.
- Always pay your bills on time – Your payment history is the single most important factor in determining your credit score. If you struggle to remember due dates, try signing up for automatic payments or setting alerts on your phone so you never miss a payment deadline.
- Avoid taking on too much credit at once – Only apply for credit when you need it, or when expanding your amount of available credit can help boost your credit score. Opening too many credit accounts within a short period of time can lower your credit score, so you should avoid taking on too much credit at once.
It’s almost impossible to remove a student loan from your credit report, but you can and should dispute any inaccuracies, as these can hurt your credit score. If you’ve paid off your student loans, you should also regularly monitor your credit report to make sure paid and closed accounts don’t get reported as open or unpaid.