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Having a student loan on your credit report in and of itself isn’t a problem. But missing payments on student loans can cause serious damage to your credit. While you may want to remove negative student loan information from your credit report, your options for doing so are limited. If you can prove the information is inaccurate, you should be able to get it removed. But if the reporting is legitimate, you may be out of luck. It can be challenging to navigate this issue of loans and your credit record. Here, you’ll learn more about the topic, including:
How student loans can affect your credit score
Which student loans can be removed from your credit report
How to get student loans off a credit report
Pros and cons of removing student loans from a credit report.
How Student Loans Affect Your Credit Score
Student loan debt can have a positive or negative impact on your credit. Making on-time payments on your student loans can improve your score and show creditors that you’re responsible with debt. Paying down your balance can also boost your scores, as your “amounts owed” make up 30% of your FICO score. (Owing more can lower your score; owing less can raise it.)Once you’ve paid a student loan off in full, the record of it will remain on your credit report for 10 years. Since this “paid in full” account will look good to creditors, there’s no reason to remove it from your credit report. On the flip side, student loans can damage your credit if you miss payments. Skipping payments can cause your student loans to go into delinquency or default. Once the late or missed payments are reported to the credit bureaus, they will show up on your report and can be a red flag to future creditors. Late payments will also drag down your credit score. Your payment history (which includes if you are paying your debt on time) is the top contributor to your score, accounting for 35% of the rating. Student loan delinquencies can remain on your credit report for seven years.
Can Student Loans Be Removed From Your Credit Report?
Can student loans be removed from your credit report? That depends. If all the information related to your student loans is accurate, the answer is usually no. Your credit report is meant to contain an accurate history of your loan repayment, so you can’t delete legitimate information. If, however, the information is inaccurate, you can try disputing it. Maybe a loan servicer incorrectly reported a late payment. Or perhaps they didn’t process a deferment or forbearance even though you applied and were approved. In this case, you can file a dispute and provide documentation that the information is in error. If your dispute is successful, the false records should be removed from your report. You may also be able to get a default on federal student loans removed from your credit report after you successfully complete loan rehabilitation. Through rehabilitation, you can get your loans back into good standing by making regular payments and then have the default removed from your credit report. You’ll learn more about this below. Recommended: Student Loan Interest: What It Is and How It Works
How to Remove Student Loans From Credit Report
There are two main ways to remove student debt from your credit report: disputing inaccurate information and rehabilitating federal student loans in default. Here’s what you need to know about each.
File a Dispute
If you see inaccurate, negative information on your credit report, you can file a dispute for free. You can file one online with each of the three credit bureaus, TransUnion, Equifax, and Experian. The credit bureaus will then investigate your claim on your behalf and notify you of a decision.Alternatively, you can go straight to the source and dispute the error with your loan servicer. Let them know what the mistake is and ask them to correct it. The Federal Trade Commission has a helpful sample dispute letter you can follow.To boost your chances of success, gather supporting documentation for your claim. If the loan servicer reported a missed payment when your loans were in deferment, for instance, send paperwork showing that your payments were deferred at the time in question. The credit bureaus typically take up to 30 days to investigate a dispute. If they determine that the information is inaccurate, they will remove it from your credit report.
Apply for Loan Rehabilitation
Most of the time, you can’t remove student loans from your credit report if the information is accurate. However, there is one exception. Applying for rehabilitation of defaulted federal student loans can result in the default being removed from your credit report. Rehabilitation works like this: You agree to make nine reasonable monthly payments on your student loans during a period of 10 consecutive months. Your payment will equal 15% of your annual discretionary income, divided by 12. After you’ve completed your ninth payment, the Department of Education will send a request to the credit reporting agencies asking them to remove the default from your account. Once the default has been removed, you may see your credit score go up. Note that loan rehabilitation is a one-time deal, and it’s only available for federal student loans, not private student loans.
How Long Are Student Loans on Credit Reports?
As mentioned above, student loans stay on your credit report for 10 years after being paid off and can help lift your credit score.If, however, you have been late with payments on your loans or defaulted, those delinquencies can stay on your report (and lower your score) for seven years.
Can You Dispute Student Loans on Credit Reports?
There are a few situations when disputing student loans on your credit report could make sense:
You’re still in school or your grace period. When you’re enrolled at least half-time in school or for six months afterward, you’re not required to make payments on your student loans. Any missed payments reported on your credit report would be an error that you can dispute by proving you were still a student at the time.
You were approved for forbearance or deferment. Along similar lines, you’re not required to make payments during a period of forbearance or deferment. If your credit report is showing late or missed payments, dispute the information by showing documentation of your forbearance or deferment.
Your closed accounts are reported as open. You may have paid a loan off in full but see it listed as an open account on your credit report. In this case, send documentation that proves you paid off the loan.
You see another mistake on your credit report. If you see any other mistakes related to your student loan payments, it’s worth disputing them to have the information corrected or removed.
Pros of Removing Student Loans on Credit Reports
If you have inaccurate, negative student loan information on your credit report, it could be dragging down your credit score. A negative credit history and low credit score can make it difficult to open a credit card, rent an apartment, or engage in other financial activities.Getting those negative remarks removed can improve your credit score and make life easier. You’ll likely look like a more credit-worthy individual once the incorrect negative information is removed.
Cons of Removing Student Loans From Credit Reports
If your student loans show a history of on-time payments, there’s no reason to get them removed. In fact, paying off student loans in a timely manner can help your credit score and show creditors that you repay your debts. Plus, having a student loan on your account could diversify your credit mix, which could further boost your score. If the student loan information on your credit report is accurate and positive, there’s no need to worry about removing it.
How Refinancing Can Help With Student Loans
Once you’ve got your credit score in decent shape, it could be worth exploring refinancing your student loans for better rates. Refinancing can help you qualify for a better interest rate than you have now. Lowering your interest rate can not only reduce your interest charges, but it may also lower your monthly student loan payments. Plus, you can choose new repayment terms, perhaps opting for a longer term to further reduce your monthly bills. Making your payments more affordable could make it easier to keep up with them, which in turn could improve your credit score. At the same time, be cautious about refinancing federal student loans, since doing so means forfeiting access to federal repayment plans and programs. If you can’t qualify for refinancing right now, it could be worth taking steps to improve your credit so you can apply in the future. Some lenders also let you apply with a cosigner if refinancing and your credit aren’t a good match yet. If you have someone willing to cosign, their strong credit could help you qualify or get better rates. Recommended: Your Guide to Choosing a Student Loan Repayment Plan
The Takeaway
If you’re interested in refinancing student loans for better rates, take some time to shop around with multiple lenders. Since every lender is different, one might offer you a better deal than someone else. When researching how to refinance student loans, many lenders let you check your rates online with no impact on your credit score. Through this easy prequalification, you can compare offers to find your best one. Lantern can help make this process simple, bringing you multiple offers from leading refinancing providers, quickly and easily. See how simple it can be to explore your student loan refinancing options with Lantern.
Frequently Asked Questions
Can you get student loans removed from your credit?
Do student loans hurt your credit score?
What credit score is needed to refinance your student loans?
Photo credit: iStock/Kateryna Onyshchuk
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About the Author
Rebecca Safier
Rebecca Safier has nearly a decade of experience writing about personal finance. Formerly a senior writer with LendingTree and Student Loan Hero, she specializes in student loans, financial aid, and personal loans. She is certified as a student loan counselor with the National Association of Certified Credit Counselors (NACCC).
