Debt Consolidation Credit Counseling In Phoenix

If you have defaulted on your student loan you are in a difficult position. Not only are you likely to have to repay this debt your credit will be ruined.

This is what happens when your loan is defaulted on; your account is sent to collection agencies and then there are various collection efforts. The government can garnish your wages, your social security benefits and more.

According to a law that Congress created called the Fair Credit Reporting Act, you only have a negative mark on your credit report for a maximum of seven years. Although, these debts can be collected upon for life!

If you have a defaulted student loan on your report, more often than not you will be turned away for a new line of credit. You are likely to have to pay interest rates of roughly 25% and place large down payments just to be approved.

There is a possibility that this mark can be removed from your report and a chance that you may be able to remove the debt entirely. To do this, you should dispute the collection marks on your report.

You should send a dispute letter to each bureau; in your letter provide an explanation as to why the mark is not accurate. For example; it has been reported for seven years already, not my account, account is paid in full and so on.

This is the most difficult item on a credit report to negotiate. As a benefit to you, we suggest that you hire a credit repair service to dispute it on your behalf. This will give you a licensed attorney fighting for you which will be knowledgeable of the new laws constantly passed by congress to help protect consumers.

You credit score impacts every aspect of your life and thus we feel it is worth the money to hire an expert. This can be done at very reasonable rates and compared to the high cost of low credit score it is a good idea.

Understand that government loans, such as a Stafford loan or the Perkins loan, will be much harder to eliminate from your report. A private loan, such as Sallie Mae, will be easier to remove than a federal loan, but still difficult.

Once the bureaus receive your dispute letter, the creator of the negative mark will be contacted and ask to verify the debt. The items verified will be that the account is yours, the balance of the account, and that the dates are correct.

The Fair Credit Reporting Act states that any unverifiable mark on your credit report must be removed. Therefore, if the account can not be verified, the negative mark must be removed from your credit report.

Errors are made all the time by the bureaus and lenders, but it is your credit that will suffer. Estimates show that 1 in every 4 people have an error on their report that is costing them money in higher interest rates. Therefore, if this mark is in error, it is very important to include all documentation that you have with your dispute letter to verify it is in error.

In conclusion, defaulted student loans are removed every day from credit reports. If you have this, it does not mean you will have a low credit score for the rest of your life. We suggest you dispute this mark with the credit bureaus.