Every month the balances on deferred student loans increase as the deferred interest is added, but the “high credit”, “original balance”, “highest amount owed” or whatever label is on the credit reports is NOT increased.
Obviously, it’s NOT good for credit scores to have installment loan balances higher than the original loan amounts and FICO scoring software does NOT exclude from the installment balance/limit ratio the student loans with the notation indicating that the loan is in deferment.
When consumers dispute, the credit bureaus update with the new increased balance, but they do NOT update the “high credit”, the most owed.
The Experian negative score factor:
The remaining balance on your non-mortgage installment loans is too high.
FICO scoring software determines that you are a poor credit risk because you’re owing more on your non-mortgage installment loans than when you got the loans.
Current balance / high credit = percentage of amount still owed.
In this case:
$8,779 / $6,000 = 146%
Several clients disputed TWICE and TWICE all three credit bureaus FAILED TO CORRECT!
The first dispute of the Sallie Mae student loans to Equifax:
2) Sallie Mae [account # redacted] and [account # redacted] – Please correct the High Credit. It can not possibly be LOWER than the current balance.
Equifax VERIFIED with the incorrect reporting.
The 8/18/08 2nd dispute :
2) You VERIFIED the OBVIOUSLY incorrect reporting of the Sallie Mae student loans with the High Credit LOWER than the current Balance. Please advise Sallie Mae to correct the reporting and to ensure that ALL student loans are reported correctly as FICO scores are lowered by this practice.
The 9/9/08 Equifax investigation results:
HUH?
(Click on picture for larger view)
These two Equifax screenshots are from the SAME investigation results.
This is a TYPICAL example of communications with credit bureaus.
When a client disputed with Sallie Mae directly, it responded that it was reporting accurately and it failed to correct the credit reporting.
Wow… that is yet another student loan gotcha. The protections of student loans is all for the loan companies. sometimes I think it would have been better to pay for school with a credit card for a few reasons.
It’s NOT too late!
I just posted at http://trado.info/video-default-the-student-loan-documentary after I watched the video at your blog.
You made a few bucks today (those DEBT CONSOLIDATION ads pay well), but of course that’s not enough to make just one loan payment.
There are MANY ways to get back at the banks, you just need to get a DIFFERENT kind of education, learn about the laws and ways to evade them.
“You can’t squeeze blood out of a turnip.”
I am considering a class action law suit against sallie mae for thier reporting of high limit loans information. I believe the high limit should be the amount of the loan once it goes into repayment, not the amount of the loan the day it is written. I am going to spend the week looking at regulation but I would be surprised to see if there is a legal requirement to report the limit the date the loan was made. I believe it is a fairness issue and a federal court would come down on the side of the student. For it to work thousands of student borrowers would need to be involved.
This is a simple fix by the Department of Education. They can work with other executive branch agencies to write a regulation requiring Sallie Mae to report the amount correctly. I would suggest the date loans went into repayment. That would make everyone’s loan amount the highest the date repayment starts. Write the President, let the White House work for the student vote this time.
Gary, please see http://liarsandcheats.info/incorrect-student-loan-reporting-lowers-fico-scores/
I had posted the follow up disputes for my client, but he never sent them as he got busy, moved, etc. and it wasn’t at the top of his list of things to do.
I currently have several other clients with that problem, but it’s NOT their big issue. It’s not surprising that people hire me to deal with collections and chargeoffs and those issues are more important for their FICO scores.
If you have a few hundred thousand dollars to spare (millions would be better), a class action will likely work.
If not, you’ll have to do it the hard way and get it done yourself. Submit FACTUAL and PUBLIC complaints to regulators, publish their responses, sue in small claims, pay for national press releases, …
Maybe one of my clients will decide to pursue the issue, just got another round of verifications WITHOUT the correct high credit.
If you read the blog at Liars & Cheats Exposed you’ll see that many peoples’ balances INCREASE while making payments due to income based repayment plans. Many people don’t make nearly enough to pay off their student loans, they just don’t have the income.
I’m with Webster Tarpley and would definitely be for forgiving the 1 trillion + in student loans. That’ll be the day.