Question: I have at least 4 student loans (now consolidated) but, before these loans were consolidated, they were bought, exchanged, or sold out from one to another and then again and I think even again before I was able to consolidate them.
However, in all of this, I lost track but, now I am back on track with it and notice how the past account holder that no longer even have my account, is reporting me as late. CAN I DISPUTE THESE? It shows a bad history and they were all current from deferments, up until they were purchased or sold. My credit score has dropped drastically due to this.
Answer:Your issue is not uncommon and here are my thoughts:
Student Loan Past Lates. If you were late in the past the previous account holders can report past lates up to 7 years according to the Fair Credit Reporting Act. They are not in violation for reporting past negative account history.
Student Loan Current Lates. There should not be any current reporting of lates from past account holders. However, past negative account history, even when loans are consolidated, can remain on your credit report up to 7 years.
Duplicate Tradelines. If your credit report reflects more than one account holder reporting the SAME negative student loan account, then you may have a case of DUPLICATE reporting of tradelines. You can dispute based on duplicate tradelines reporting.
Affects of Older Negative Information. Rest assured as every month passes, the “lates” will have less negative impact on your credit scores. As long as you remain current on your consolidated loans and pay all of your other obligations on time, your credit scores will improve.
By all means dispute with the credit bureaus. As your student loans were “bought, transferred, sold or exchanged” from one lender to another, believe it or not, this may now work in your favor. It may be impossible for each account holder reporting the past negative account history to verify the information with the credit bureaus.
There are several ways you can dispute but try “NEVER LATE” or “PAID AS AGREED” on your first round of disputes and see what happens. Make sure you enclose any supporting documentation such as deferment documents.
If that does not work, on your second round of disputes try “DUPLICATE ACCOUNTS”. If that does not work try “OUTDATED.” You should allow at least 60 days between reasons for disputes as you do not want the credit bureaus to flag your disputes as “frivolous.”
You can also dispute directly with the furnisher of the information. But they may simply respond that they are within their rights to remain on your credit report 7 years.
Any derogatory information with prior lenders that is 7 years or older, should not be on your credit report at all. Definitely dispute any outdated information with the credit bureaus to get it off.
Unintended Consequence when consolidating student loans. A new loan appearing on your credit report with a recent date of opening can cause your credit score to drop also. If this happens your score can recover within a short period of time if current payments are being made on all accounts, credit card balances don't increase, and no other new accounts are opened. The best of luck to you.