How to Remove Student Loans From Your Credit Report

We oftentimes get the question: “How do I remove student loans from my credit report?” People ask this question from a couple of different angles, but ultimately, what needs to be known is being an account holder or a cosigner of student loans inevitably affects your credit — for better or worse.

Let’s dive into how student loans affect credit and what to do if you have inaccurate or negative information about your student loans on your credit report.

How student loans affect credit

Student loans are considered an installment loan on your credit report, which means you make payments over a specified period of time until the loan is paid off (or loans are forgiven).

Installment loans show that you can pay back borrowed money consistently over time. Other examples of installment loans are mortgages, auto loans, and personal loans. The biggest impact to your credit for installment loans is payment history.

Payment history is 35% of what makes up your credit score, so making your student loan payments on-time and in-full is key to maintaining a healthy credit score for student loan borrowers.

When you borrow student loans to fund your education, you’ll typically have separate loans for each semester or enrollment period. Each of these loans show up on your credit separately, even though you might have one payment to satisfy them all.

This doesn’t positively or negatively affect you by a multiplier, however. Credit scoring systems recognize that the separate loan accounts are of the same type and effectively counts them as one loan when calculating a score. Credit scores acknowledge that student loans are unique and treat them differently in the calculation.

How student loans go on and off a credit report

When you accept or cosign a student loan, it can begin to reflect on your credit report with the three major credit bureaus (Transunion, Equifax, and Experian) at any time. While in school, however, you’ll likely be in what’s called in-school deferment status, where payments are not due or required.

“Lenders don't consider a deferment on your student loans negative, so being in deferment won't hurt your credit scores. In fact, some credit scoring models exclude deferred student loans from the calculation altogether,” according to Experian.

Note: Your loan balance is still a debt you’ll eventually need to repay, so lenders might consider it when deciding whether to approve you for a new account.

Student loans can be transferred from one lender to another, either by you via consolidation or refinancing or by the Department of Education. If your loans are sold or transferred to another creditor, and the new lender will also report to the credit bureaus, so you will see both the original loans and the new loan(s) on your credit report. The original loans will have an updated status to show that they are paid or transferred, but the payment history will remain on the report for up to 7 years.

This is an important note: payment history will remain on your credit report for up to seven years even after it’s paid off, settled or in collections. For accounts that are paid-off and were never delinquent, the seven years starts on the day you settle the account. If the account was delinquent or in default and has a history of late payments, the date it first became delinquent is the starting date for the seven years.

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How to find out what’s on your credit report 

The best way to find out exactly what’s on your credit report would be to download your free credit report from AnnualCreditReport.com, the only source for your reports authorized by Federal law. This website doesn’t give you your credit score for free, but most banks and credit card companies do for their own customers.

You can request a free copy of your report every 12 months from each credit reporting company. You don’t have to pull them all at once; I typically recommend staggering them throughout the year so you always have a free one available or so you can monitor your credit more frequently.

It’s important to know that there might be slight differences in your credit score and/or credit reports from each of the three credit reporting bureaus. This can be because:

• Your credit information might not be reported to all three credit bureaus
• You might’ve applied for credit under different names which can cause fragmented or incomplete files at the credit reporting agencies
• Lenders report credit information to the credit bureaus at different times
• The credit bureaus might record, display or store the same information in different ways

If you find inaccurate information on your credit report or accidentally miss a payment and it’s hurt your credit score, there’s recourse.

Credit report dispute vs. goodwill letter

Disputing information on your credit report is done through the three major bureaus claiming that something on your report is materially incorrect. Examples of things you could dispute on your credit:

• Incorrect personal information (e.g. name, address, phone number, Social Security number, and/or date of birth)
•  Personal information never associated with you
• An account never associated with you (e.g. fraud of identity theft information where you might see inquiries, accounts or collections you never applied for)
• Negative items past their statute of limitations
• Inaccurate reporting of account
• Mixed or split credit files (sometimes can happen if you’re a Jr. or Sr.)
• Duplicate reporting of an item

Goodwill letter

A goodwill letter is where you’re asking a creditor to remove a negative mark on your credit reports due to your own error such as a technical error, personal emergency, financial hardship, address change, or a miscommunication with your creditor.

Goodwill letters aren’t an official tactic and they’re not actively publicized as a viable option by the Federal Trade Commission. This also means that creditors aren’t required to consider your request or respond to you, but it never hurts to ask.

Since negative remarks on your credit will report of seven years and payment history is 35% of what makes up your credit score, it can certainly be worth the effort to write a goodwill letter.

How to dispute student loans

Disputing your student loans is different than disputing your credit report. If you have materially incorrect information about a student loan or loans on one or more of your credit reports, try initiating a dispute online through AnnualCreditReport.com. If the information you’re disputing cannot be done online, follow these steps listed below from the Federal Trade Commission:

1. Write to the credit reporting company

Tell the credit reporting company, in writing, what information you think is inaccurate. Here’s a sample dispute letter. Include copies (NOT originals) of documents that support your position.

In addition to providing your complete name and address, your letter should clearly identify each item in your report you dispute, state the facts and explain why you dispute the information, and request that it be removed or corrected.

You may want to enclose a copy of your report with the items in question circled.

Send your letter by certified mail, “return receipt requested,” so you can document what the credit reporting company received. Keep copies of your dispute letter and enclosures.

2. Wait for a response

Credit reporting companies must investigate the items in question (usually within 30 days).The credit reporting companies forward all relevant data you provided about the inaccuracy to the organization that provided the information.

After the information provider receives notice of a dispute from the credit reporting company, it must investigate, review the relevant information and report the results back to the credit reporting company. If the information provider finds the disputed information is inaccurate, it must notify all three nationwide credit reporting companies so they can correct the information in your file.

When the investigation is complete, the credit reporting company must give you the results in writing and a free copy of your report if the dispute results in a change.

If you ask, the credit reporting company must send notices of any corrections to anyone who received your report in the past six months.

3. Contact the provider or your student loan servicer

Tell the information provider (that is, the person, company, or organization that provides information about you to a credit reporting company), in writing, that you disputed an item in your credit report. Use this sample dispute letter.

Include copies (NOT originals) of documents that support your position. The provider typically lists an address in the credit report itself for you to use.

If the provider continues to report the item you disputed to a credit reporting company, it must let the credit reporting company know about your dispute. And if you are correct — that is, if the information you dispute is found to be inaccurate or incomplete — the information provider must tell the credit reporting company to update or delete the item.

How to write a goodwill letter to your lender

If you’ve a missed or late payment reflecting on your credit you’d like removed, the first step is to communicate with your lender about getting back into good standing with your account.

Once that’s done, ask your lender for a “goodwill adjustment” to remove the negative reporting from your credit reports via phone with a customer service representative. If that doesn’t go far, write your goodwill letter via snail mail or email to the customer support department for your lender.

The best advice I can give for writing this letter is to be honest, sincere and definitely polite. Make sure to include:

• Name, address, phone number, email and your account number(s)
• Explain why you’re writing and what caused the error
• Tell them what you did to correct the issue so it won’t happen again
• Explain how this negatively affects you
• Ask for a “goodwill adjustment” to have it removed
• Tell them you’re grateful for their consideration
• Also include supporting evidence if applicable (e.g. hospital bill, unemployment information, etc.)

Again, guard your heart because creditors aren’t required to consider your request. You might not even get a response, even if they do adjust it for you! If you haven’t gotten a response or noticed a change on your credit reports within a month or two, you can follow-up by phone, email or snail mail.

Catching up on your student loan payments

If you can’t seem to catch up on payments and your student loan 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.