Credit Score

Student Loans Create Credit Report Nightmare

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Jordan asks:

I had a student loan in 1998 which was in 2 parts; one being $300-400 the other $2500-2600. When I received the student loan I was not aware that it would generate as 2 loans. I got behind on repayment and eventually my income tax was attached and it was paid in full; paid off early 2005.

The loans were through a bank but managed by Sallie Mae Servicing, guaranteed by the Texas Guaranteed Student Loan Corporation.  The problem is that I have this listed on my credit report 3 times for each part of the loan.  That makes a total of 6 negative entries on my credit report for this Loan. Negative listings twice by Sallie Mae and once by TGSLC, I have tried to dispute that it is listed 6 times for the same thing but can not get the credit bureau to do anything. How can a creditor legally list something on a credit report numerous times for the same thing and how do I resolve this?

Also, creditors put a negative entry on my credit report; then sell it to a collection agency.  Why can they list the original creditor entry and also the collection agency entry on my credit report for the exact same credit item? This does not seem fair or right that they can stack your credit report with negative entries and I have tried addressing this with the creditor and the credit bureau with no resolution. All they do is keep telling me that the entry will remain for a ridiculous amount of time.

An item has been on my credit for 6-7 years and it is sold to another collector; basically they say that it can then remain on my credit report for another 7 years.  I try to be financially responsible but most of my credit issues are due to a divorce and getting laid-off from work 3 times (3 different companies) since 1995.

A. This is extremely frustrating, I realize. As our resident credit scoring guru John Ulzheimer points out,
"Student loans are a unique animal in the credit world." Let’s see if I can help clarify things for you.

It is very typical for what seems like one student loan to turn out to be multiple loans. Each of these loans can be reported for up to seven years (for negative information) or indefinitely if the information about the account is positive or neutral.

Even if you had consolidated your two loans into one, the two original loans would have remained on your credit reports for the time frame I just described. But any previous loans should show zero balances and only the new loans should list any outstanding balances.

I contacted Sallie Mae about your predicament and they gave me the standard credit advice: "Consumers may submit a dispute for any loan that is reflected on their credit report by contacting the particular credit bureau. The credit bureau will then forward an Automated Credit Dispute Verification (ACDV) to the organization in question. It is the credit bureau’s responsibility to respond to the consumer. Sallie Mae’s policy is to review disputes and respond promptly to the credit bureau; however, our customers are welcome to contact us at any time, and we will assist them."

I haven’t seen your credit report, but it sounds from your letter that you fell behind on the first two loans, and they then were sole to TSLGC. I am not sure why Sallie Mae would be reporting the same loans twice unless you consolidated (which should result in one new loan, not two). So perhaps you need to try to contact them once more through their Customer Advocate Unit and ask them to explain why the duplicate accounts are appearing. 

You are also concerned about some other collection accounts on your credit report. If your account is delinquent and turned over to collection agency, the rule is that both the original account and the new collection account can each be reported. I know it seems very unfair that two accounts can be reported for the same debt, but that’s generally considered accurate and acceptable. As I said earlier, though, the first account should reflect a zero balance. If any of the information about either of those accounts is inaccurate or incomplete, you have the right to dispute them. If the credit reporting agency cannot verify the information with the source reporting it, it must be removed.

Finally, with regard to the other collection items on your report, it sounds like the debt collector has given you wrong information. Collection accounts can only be reported for up to seven and half years from the date you first fell behind with the original creditor. That’s true whether they are paid or unpaid. The collection agency cannot extend that period.

Making a false statement is illegal under the Fair Debt Collection Practices Act. I would suggest you talk to a consumer law attorney and/or your state attorney general‘s office about the agency that has misled you.

For more credit advice, I suggest you visit’s Learning Center.

Gerri Detweiler
– Personal finance author, radio host and credit expert. Gerri
contributes budgeting, debt recovery and savings information online.

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  • Jim

    I check my credit report every year to make sure everything is in order. This year I got all three of them together in one report. My student loans were consolidated into one big loan in 2005 but some individual loans were showing as open but 0 balance. An online request to report those as transferred/paid in full/closed got my report updated to accurately reflect my old student loans.
    I understand what this person is going through with small split loans. This very thing happened to me my first year of college. The loan was small enough that later on I requested that much more on another loan to clear the small one. Technically doing this does not pay it off but it grouped it. Now that they’re all consolidated it isn’t a issue now and I’m glad to be done with using student loans and now have to pay them off.

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  • Tom

    Usually with this type of situation, you’re only able to dispute but with companies as big as Sallie Mae, it can become VERY frustrating.

  • Mike Clover

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  • Nicoals A

    I wonder if this client is disputing correctly? Credit bureaus will turn down a dispute if the client is asking for the wrong type of dispute.

  • Andrew

    So after 7.5 years, student loans drop off credit reports??? I have defaulted student loans at 7 years… so when they are taken off my report, i can start rebuilding my credit and just never pay the loans??? am i understanding correctly?

  • jeff

    How do I make the loans appear as one loan?

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