When you fall behind on your student loan payments, the incident or incidents are reported to the credit bureaus. There are several student loan servicers, such as Fedloan Servicing. If Fedloan is your student loan servicer you can try to get the company to remove a late payment from your credit report, but getting these negative marks removed can be difficult.
Late payments can seriously damage your credit score, making it difficult to secure loans in the future. If you want to get Fedloan Servicing’s credit reporting department to remove late payment information from your report, you have some options.
Let’s start by breaking down what Fedloan Servicing does and why you’ll probably need to work with them to correct your late student loan payments.
What qualifies as a late payment?
If you’ve missed even one or two student loan payments, Fedloan Servicing will notify the credit reporting agencies, which can negatively impact your credit. There are two different phases your account can fall into once you’ve missed payments: delinquent accounts and defaulted accounts.
When your account is delinquent, this means you are behind on payments. Your loan becomes delinquent after your first missed due date. Your loan status is reported to consumer reporting agencies on a monthly basis, so even being delinquent once can have a long-term impact.
A loan becomes defaulted after existing as a delinquent loan for 270 days. Defaulted loans can result in the following negative outcomes:
- Damaged credit rating due to continued negative credit reporting
- Garnishment of wages to begin loan repayment
- Tax refunds being withheld
- Ineligibility for federal and state financial aid
How do I remove late payments?
If you’re behind on payments to FedLoan, it’s important to contact the loan servicer immediately and make plans to catch up. If you have the money to repay your loans through Fedloan Servicing, but just keep forgetting to make payments on time, then catch up on your payments and sign up for autopay to prevent missed payments in the future. You can also reach out to FedLoan to change your monthly due date to a more convenient date for you.
If you’ve caught up on your loans and you still feel Fedloan is inaccurately reporting your payment status, you can file a dispute directly with the company. Here’s how:
Download and print the Fedloan credit dispute form.
Fill out the form. You’ll need information such as your Fedloan Servicing account number or Social Security number, your Tradeline account number and specific details about your dispute. Retain a copy of the completed form for your records.
Mail the completed form to:
FedLoan Servicing Credit
P.O. Box 60610
Harrisburg, PA 17106-0610
You can also fax the dispute to (717) 720-1628. When submitting your dispute, include any supporting information, such as a copy of the credit report that you are disputing.
If your loan has gone into default, the only way out might be through rehabilitation. Once you’ve gone through the process of rehabilitating a loan, the default classification will be removed from your account and any collections through wage garnishment or Treasury offset ceases.
You’ll also regain eligibility for benefits that were available before your loan defaulted like deferment, forbearance, student repayment plan options and loan forgiveness.
Loan rehabilitation can only be done once, so make sure you’re ready for the opportunity. Here’s how to get started with the loan rehabilitation process for a Direct or FFEL loan:
- Contact your loan servicer.
- Form a written agreement to make nine consecutive payments toward your loan, each within 20 days of the due date — and all nine payments are to be made on time within 10 months.
- Wait for your loan servicer to establish the payment amounts due, usually calculated to be around 15% of your discretionary income and then divided by 12. This monthly amount could be as low at $5 depending on your discretionary income.
- Begin payments and complete your loan rehabilitation after nine payments.
Because rehabilitating your loans is a process that needs to be handled in a way that aligns with your financial circumstances, it’s best to contact Fedloan Servicing for more information on how to remove late payments.
If your credit score has been impacted by late payments and you’ve exhausted your other options, writing a student loan goodwill letter can be worth the effort. A goodwill letter explains the reason your loan payments were late.
When writing your goodwill letter, detail any circumstances that led to the late payment. The success of your letter depends partially on the empathy of whoever approves or denies your claim. That being said, don’t let the uncertainty of approval deter you from explaining the reason for your late payment and proving your ability to repay your student loans.
Try to include the following for the highest chance of success:
- A formal and respectful tone, as if addressing a professor
- Identifying information like your name and account number, as well as date of late payment
- Brief explanation of why you missed payment(s) and why you won’t in the future
- A formal request for a “goodwill adjustment”
- Proof that you usually pay on time if possible
If approved, the servicer will request that credit bureaus remove the late payment(s) from your record. You should expect the change on your credit reporting within 45 days — that’s about how long it takes your loan servicer to report to the credit reporting. Once your change is reported, the credit reporting agency typically updates your information immediately.
There’s no guarantee a goodwill letter will result in the company removing late payments from your record; however, there’s no risk in trying to remove a late payment, and you have a lot to gain from taking a goodwill approach with Fedloan.
What if you can’t remove late payments?
The best-case scenario when it comes to repaying your student loans is to get caught up on late payments and stay caught up. A late payment can stay on your credit report for up to seven years. Doing the work to get your payments and credit back on track is crucial to being able to take other financial steps such as leasing a car or owning a home.
If you can’t seem to catch up on payments and your Fedloan debt feels overwhelming, we can help. Reach out to a Student Loan Planner consultant and we’ll help you navigate your student loans to find a repayment plan that works for you and your long-term goals.