What does it take to get Sallie Mae and the credit bureaus to ACCURATELY report student loans after the balance increased due to deferment?
FICO scores are LOWERED when student loans are reported with the original balance as the “high credit” or “most owed” after interest has been added to the loan due to deferment or an income based repayment plan.
The Experian negative FICO score factor from a client’s mortgage credit report:
33 PROPORTION OF LOAN BALANCES TO LOAN AMOUNTS IS TOO HIGH
Nobody should have to “BORROW” to get an education, but to deliberately lower the FICO scores of people who PAY their student loans by INCORRECT credit reporting adds insult to injury.
This is a prime example of government sanctioned redistribution of assets from the working people to the elite — the bankers and share holders.
- 10/30/10: The credit bureau disputes
- 11/30/10: The Sallie Mae dispute
- 1/6/11: Request for Assistance to Student Loan Ombudsman
- 1/14/11: CORRECT credit reporting
- 7/22/11: reversion to INCORRECT credit reporting
10/30/10 Credit Bureau Disputes
EQUIFAX:
1) Sallie Mae — Please update the Credit Limit/Original Amount to the CURRENT balance. This is a student loan on the Income Based Repayment program (a government program) and I am making my timely payments. The failure to report the CURRENT balance as the Credit Limit/Original Amount causes my FICO scores to be lowered because it appears that I exceeded my limit.
Verified:
TRANS UNION:
1) Sallie Mae — Please update the Credit Limit/Original Amount to the CURRENT balance.
This is a student loan on the Income Based Repayment program (a government program) and I am making my timely payments. The failure to report the CURRENT balance as the Credit Limit/Original Amount causes my FICO scores to be lowered because it appears that I exceeded my limit.
Verified:
EXPERIAN:
1) Sallie Mae — Please update the Credit Limit/Original Amount to the CURRENT balance.
This is a student loan with Income Based Repayment (a government program) and I am making my timely payments. The failure to report the CURRENT balance as the Credit Limit/Original Amount causes my FICO scores to be lowered because it appears that I exceeded my limit.
Verified:
11/30/10 Dispute with Sallie Mae
11-30-10-letter-to-SallieMae-pub
Despite my disputes with the credit bureaus, you continue to report my student loan with a “highest amount owed” much LOWER than the current balance to all three credit bureaus.
As you know, the balances on student loans increase as the accounts are in deferment and interest accrues. Obviously, the highest amount owed also increases with the balances. I am on an income based repayment plan and I am making my timely payments.
…
We appreciate your reaching out to us to have information removed from your credit report. We’ve conducted an investigation regarding your questions and reviewed the information that you provided to us. Based on the information available to us, our research has concluded that the information we’re reporting to the consumer reporting agencies is correct and that no corrections are warranted.
…
1/6/11 Request for Assistance to Student Loan Ombudsman
The 2 page detailed explanation WHY it is so important that the credit bureaus report ACCURATELY and the Trans Union investigation results and the correspondence with Sallie Mae were included.
… Records show that Sallie Mae correctly reported the amount for which your consolidation loan was approved, the subsequent increase in the balance, and that the account is current. The issue you object to, cIassification as the “High Balance” is TransUnion’s nomenclature [definition]. Lenders do not determine how a specific credit agency reports information or calculates a credit score. The Federal Trade Commission oversees the national credit reporting agencies; please direct your inquiry to them.
If you have questions, please send an e-mail to my attention at fsaombudsmanoffice@ed.gov or call me at (202) 377-3805.
Sincerely,
Thad Bartkowiak
Team Leader
A classic demonstration of government incompetence — or is it corruption and the DELIBERATE infliction of damages to the people who pay their salaries?
The issue we object to is NOT “nomenclature”, but the INCORRECT credit reporting and subsequent DAMAGES to student loan borrowers due to lower FICO scores.
1/14/11 CORRECT Credit Reporting
This is the reporting from an INCOMPLETE tri-merged (credit monitoring) report. You can see the $48,078 reported by all bureaus for all balance and “high credit” fields. This was the very first time I saw a student loan with a current balance higher than the original balance (deferment) reported correctly.
Apparently Sallie Mae decided to update its reporting after being contacted by the Ombudsman’s Office, not expecting that Mr. Bartkowiak would side with them:
I did not expect this CORRECT reporting to last.
In over 20 years in the credit business, I’ve seen my share of corrections reverting to the previous INCORRECT reporting.
The 7/22/11 INCORRECT credit reporting
Sallie Mae got the go ahead from the government to continue to lower student loan borrowers’ FICO scores and quite likely the reporting reverted within a few weeks.
EQUIFAX:
TRANS UNION:
EXPERIAN:
As anticipated, all three credit reporting agencies reverted to report the original loan amount for the “high credit” or “high balance”. While Experian’s field name is “Credit Limit / Original Amount”, they should report the new current balance because the loan amount is increasing according to the CONTRACT and the new balance is essentially is the CREDIT LIMIT.
Student loan borrowers who make their payments AS AGREED or are in deferment are NOT over the credit limit and should NOT be PUNISHED with higher interest rates, credit and employment declines and lost opportunities due to credit scores based on FALSE information in the credit reports.
Also please note that reverse mortgages and negative amortization adjustable rate mortgages are similar loans. I have NOT seen this type of incorrect reporting for mortgages.
NEXT:
Our response to Thad Bartkowiak at the Ombudsman’s Office.