Student Loan Credit Repair and How to Improve Your Credit Score

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Student loan debt totals a whopping $1.74 trillion, which averages out to $32,731 per borrower, according to the Federal Reserve.

That kind of student debt can hurt your credit score. Miss a payment or default — which is much easier to do with a high balance — and your credit score will take a beating. Even if you always pay on time, you may also find yourself with a lower credit score because of errors on your credit report.

Student loan credit repair can help you clean up your credit. Here’s what you need to know:

• What are student loan credit repair services?
• What happens to my credit score if I default on student loan payments?
• If my loans are forgiven does that affect my credit?
• Can I refinance my student loans?

What are student loan credit repair services?

One of every five consumers has an error on at least one of their credit reports, according to the Federal Trade Commission. These errors could include incorrect late or defaulted payments when you always paid on time. They could also include legitimate errors you made more than seven years ago, which is the maximum amount of time negative information can remain on your credit report.

You have the right to dispute inaccurate information on your credit report, and the Consumer Financial Protection Bureau explains how. But disputing errors can be a long and arduous undertaking, and many borrowers choose to use a student loan credit repair service instead.

Student loan credit repair can’t help you remove factual negative student loan information, such as late payments, delinquency, or default that you’re responsible for. But if your credit report has inaccurate negative information about your student loan, a credit repair service specializing in student loans can help you remove the errors.

What happens to my credit score if I default on student loan payments?

If you miss a scheduled monthly payment for your student loan, your loan is immediately considered delinquent. Your loan will remain delinquent until you make the missed payment. If you miss enough payments, you’ll be considered in default on the loan, which can have some serious consequences for your credit report.

Here’s what will happen to your credit score if you default for each type of loan:

Federal student loans

Federal student loan servicers report delinquent loans to the credit bureaus after 90 days of no payments. In most cases, the loan is considered in default after 270 days of no payments, although some federal student loans need 360 days of missed payments before being considered in default.

The defaulted loan will remain on your credit report for seven years from the date of the first missed payment — unless you’ve defaulted on a federal Perkins loan. In that case, the default will remain on your credit report until you’ve paid back the loan in full.

While it’s impossible to say exactly how big a hit your credit score will take if you default on your federal student loans, note that payment history makes up 35% of your credit score. Since a default shows a history of continued non-payment, you can expect the credit score downturn to be significant.

Private student loans

The exact timing of when private lenders report student loan delinquency to the credit bureaus varies from lender to lender. However, private lenders typically report delinquency when there’s been no payment for 60 days — although some lenders may make the report as quickly as 30 days after the missed payment.

Private student loan lenders also have a shorter timeframe for reporting defaulted loans. They alert the credit bureaus to borrower default after 120 days of missed payments.

See Also: Student Loan Consolidation vs. Student Loan Refinancing

If my loans are forgiven does that affect my credit?

Federal student loan borrowers may wonder if qualifying for loan forgiveness could have an impact on their credit scores.

The answer is: Not exactly. Here’s why.

Student loans are considered installment loans, meaning you make the same monthly payment over a set amount of time. Credit bureaus like to see a healthy mix of installment loans and revolving loans.

If student loan forgiveness wipes out the entire balance of your loan and closes the account, you may see a temporary dip in your score if the student loan was your only installment loan. Your score will probably go right back up again, though, because the student loan forgiveness reduces your debt-to-income ratio. This is the amount of your monthly income that goes toward your debts.

It’s unlikely that you’ll see a momentary boost from loan forgiveness. That’s because your payment history on the loan doesn’t disappear just because the loan has been forgiven. Any missed payments or other negative incidents will remain on your credit report, even though the loan itself has been forgiven.

How is my credit score calculated?

To better understand why loan forgiveness has so little effect on your credit score, it’s helpful to understand what makes up the credit score calculation.

Your credit score is made up of five main components, each with a different weight:

• Payment history (35%): It’s important for lenders to know how likely you are to make on-time payments. Lenders look at your payment history to decide if you’re likely to make your payments month after month. This is why payment history is the largest component of your credit score.
• Credit utilization (30%): Your credit utilization is how you owe on your revolving credit lines compared to your total available credit limits. Having a high credit utilization ratio can make lenders worry that you’re overextending yourself financially.
• Credit history (15%): The longer you keep credit accounts open, the more proof lenders have that you can handle carrying credit for the long haul. This is why it’s usually a good idea to keep accounts open even if you’re not using them.
• New credit (10%): Applying for new credit, such as a loan or credit card, can temporarily ding your credit score. If you only apply for a single new credit account, your score will bounce back quickly. But opening several accounts all at once can seriously hurt your score.
• Credit mix (10%): Lenders want to see that you can manage both installment loans and revolving credit. That’s why having a mix of diverse credit accounts can improve your score.

Check Out: How to Build Credit Fast and Effectively

Can I refinance my student loans?

When you refinance your student loans, you take on a single, new loan that you use to pay off your previous loans. You’ll then have a single monthly loan payment and only one loan servicer. In many cases, refinancing will allow you to reduce your interest rate, your monthly payment, or your repayment term.

Refinancing your student loans may affect your credit score. Since you’re opening a new credit account with the refinance, you might see a temporary dip in your credit score immediately after the refinance.

But student loan refinancing can also help improve your credit score. Having a more affordable monthly payment makes it less likely that you’ll miss a payment, improving your payment history. It can also lower your debt-to-income ratio.

Credible lets you compare student loan refinancing rates from the lenders below without affecting your credit score.

Lender	Variable rates from (APR)	Fixed rates from (APR)
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	4.86%+	3.85%+
Fixed APR: 3.85%+ Variable APR: 4.86%+ Min. credit score: 720 Loan amount: $10,000 to $400,000 Loan terms (years): 5, 7, 10, 15, 20 Repayment options: Military deferment, forbearance Fees: Late fee Discounts: Autopay Eligibility: Must have a credit score of at least 720, a minimum income of $60,000, and must be a resident of Texas Customer service: Email, phone Soft credit check: 720 Cosigner release: No Loan servicer: Firstmark Services Max. Undergraduate Loan Balance: $100,000 - $149,000 Max. Graduate Loan Balance: $200,000 - $400,000 Offers Parent PLUS Refinancing: Does not disclose
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	6.53%+1	5.89%+1
Fixed APR: 5.89%+1 Variable APR: 6.53%+1 Min. credit score: Does not disclose Loan amount: $10,000 to $750,000 Loan terms (years): 5, 7, 10, 15, 20 Repayment options: Immediate repayment, academic deferment, military deferment, forbearance, loans discharged upon death or disability Fees: Late fee Discounts: Autopay, loyalty Eligibility: Must be a U.S. citizen or permanent resident and have at least $10,000 in student loans Customer service: Email, phone, chat Soft credit check: Yes Cosigner release: After 24 to 36 months Loan servicer: Firstmark Services Max. Undergraduate Loan Balance: $100,000 to $149,000 Max. Graduate Loan Balance: Less than $150,000 Offers Parent PLUS Refinancing: Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	6.99%+2	6.99%+2
Fixed APR: 6.99%+2 Variable APR: 6.99%+2 Min. credit score: Does not disclose Loan amount: $5,000 to $300,000 Loan terms (years): 5, 7, 10, 12, 15 Repayment options: Military deferment, forbearance, loans discharged upon death or disability Fees: Late fee Discounts: Autopay Eligibility: All states except for ME Customer service: Email, phone, chat Soft credit check: Yes Cosigner release: After 24 to 36 months Loan servicer: College Ave Servicing LLC Max. Undergraduate Loan Balance: $100,000 to $149,000 Max. Graduate Loan Balance: Less than $300,000 Offers Parent PLUS Refinancing: Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	7.57%+5	6.0%+5
Fixed APR: 6.0%+5 Variable APR: 7.57%+5 Min. credit score: 700 Loan amount: $7,500 to $200,000 Loan terms (years): 5, 10, 15, 20 Repayment options: Immediate repayment, academic deferment, forbearance, loans discharged upon death or disability Fees: None Discounts: Autopay Eligibility: Must be a U.S. citizen or permanent resident and submit two personal references Customer service: Email, phone Soft credit check: Yes Cosigner release: After 24 months Loan servicer: Firstmark Services Max. Undergraduate Loan Balance: $150,000 to $249,000 Max. Graduate Loan Balance: $150,000 to $199,000 Offers Parent PLUS Refinancing : Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	4.86%+3	4.84%+3
Fixed APR: 4.84%+3 Variable APR: 4.86%+3 Min. credit score: 680 Loan amount: $10,000 to $250,000 Loan terms (years): 5, 7, 10, 15, 20 Repayment options: Forbearance Fees: None Discounts: None Eligibility: Must be a U.S. citizen or permanent resident, have at least $15,000 in student loan debt, and have a bachelor’s degree or higher from an approved school Customer service: Email, phone Soft credit check: Yes Cosigner release: No Loan servicer: Mohela Max. Undergraduate Loan Balance: $250,000 Max. Graduate Loan Balance: $250,000 Offers Parent PLUS Refinancing: Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	8.52%+4	5.12%+4
Fixed APR: 5.12%+4 Variable APR: 8.52%+4 Min. credit score: 670 Loan amount: $5,000 to $250,000 Loan terms (years): 5, 10, 15, 20 Repayment options: Academic deferment, military deferment, forbearance Fees: Late fee, returned payment fee Discounts: Autopay Eligibility: Must be U.S. citizen or permanent resident Customer service: Email, phone, chat Soft credit check: Yes Cosigner release: Yes Max undergraduate loan balance: $250,000 Max graduate loan balance: $250,000 Offers Parent PLUS refinancing: Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	5.04%+	4.89%+
Fixed APR: 4.89%+ Variable APR: 5.04%+ Min. credit score: 700 Loan amount: $5,000 to $300,000 Loan terms (years): 5, 7, 10, 15 Max. undergraduate Loan Balance: $125,000 Time to Fund: 10 to 30 days Repayment options: Immediate repayment, forbearance Fees: Late fee Discounts: Autopay Eligibility: Must be a U.S. citizen or permanent resident and have already graduated with at least an associate degree from an eligible institution Customer service: Email, phone Soft credit check: Yes Cosigner release: After 12 months Loan servicer: LendKey Technologies Inc. Max. graduate Loan Balance: $175,000 Credible Review: LendKey Student Loans review Offers Parent PLUS Refinancing: No
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	N/A	6.2%+
Fixed APR: 6.2%+ Variable APR: N/A Min. credit score: 670 Loan amount: $10,000 up to the total amount Loan terms (years): 7, 10, 15 Repayment options: Military deferment, loans discharged upon death or disability Fees: None Discounts: None Eligibility: Must be a U.S. citizen or permanent resident and have at least $10,000 in student loans Customer service: Email, phone Soft credit check: Yes Cosigner release: No Loan servicer: AES Max. Undergraduate Loan Balance: No maximum Max. Gradaute Loan Balance: No maximum Offers Parent PLUS Refinancing: Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	7.12%+ - 11.19%+8	7.60%+ - 14.50%+8
Fixed APR: 7.12%+ - 11.19%+8 Variable APR: 7.60%+ - 14.50%+8 Min. credit score: Mid-to-high 600's FICO8 Loan amount: $5,000 to $500,000 (depending on degree) Loan terms (years): 5, 7, 10, 15, 20, 25 years8 Time to fund: 3 business days Repayment options: Immediate Fees: Late fee, NSF fee Discounts: Autopay8 Eligibility: Must be a U.S. citizen or have permanent residency status with a valid U.S. Social Security number Customer service: Email, phone Soft credit check: Yes8 Cosigner release: After 24 months8 Loan servicer: Firstmark Services Max. undergraduate loan balance: $125,000 Max. graduate loan balance: $500,000 Offers Parent PLUS loans: Yes Min. income: You or your cosigner must meet Nelnet Bank's income criteria
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology. View details	N/A	6.34%+
Fixed APR: 6.34%+ Variable APR: N/A Min. credit score: 680 Loan amount: $7,500 to $250,000 Loan terms (years): 5, 10, 15 Repayment options: Academic deferment, military deferment, forbearance, loans discharged upon death or disability Fees: None Discounts: Autopay Eligibility: Available in all 50 states; must also have at least $7,500 in student loans and a minimum income of $40,000 Customer service: Email, phone Soft credit check: Does not disclose Cosigner release: No Loan servicer: Rhode Island Student Loan Authority Max. Undergraduate Loan Balance: $150,000 - $249,000 Max. Graduate Loan Balance: $200,000 - $249,000 Offers Parent PLUS Refinancing: Yes
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All APRs reflect autopay and loyalty discounts where available | 1Citizens Disclosures | 2College Ave Disclosures | 5EDvestinU Disclosures | 3 ELFI Disclosures | 4INvestEd Disclosures | 7ISL Education Lending Disclosures  | 8Nelnet Bank Disclosures

Learn More: Student Loan Interest Calculator: Estimate Payments

About the author

Emily Guy Birken

Emily Guy Birken is a Credible authority on student loans and personal finance. Her work has been featured by Forbes, Kiplinger’s, Huffington Post, MSN Money, and The Washington Post online.

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