Credit Repair or Repair Credit after 90-Day Late

Thank you for your question about derogatory items on your credit report, due to late payments to Nelnet.

I understand and sympathize with your frustrations over dealing with your lender. It was wise of you to immediately set up automatic payments and catch up on the loans. It is in both you and the lender’s interest to have a smooth working relationship.

One of the best ways to make sure you make your payments on time is to set up an automatic payment, as you did, and then monitor your account activity. I recommend that you set up a budget and carefully monitor your expenses. By comparing your actual expenses against your projected expenses, you will know if you are making all of your payments.

I understand that having a derogatory item on your credit report is annoying; however, over time it is repairable. In order to help you deal with the situation let me explain to you about:

• Getting Rid of Negative Items
• Using Credit Repair
• Building Your Credit Score

Getting Rid of Negative Items On Your Credit Report

You are correct, most derogatory accounts, including 90-day lates, remain on your credit report for 7 years after the initial date of delinquency. The Fair Credit Reporting Act (FCRA) sets out the time negative accounts remain on your credit report, especially: charge-offs, collection items, foreclosures, public judgments, and bankruptcies. Delinquent federal student loans can be reported for as long as they remain delinquent.

You can get rid of inaccurate information through the dispute process. The three major CRA (Credit Reporting Agencies) have online dispute processes. However, remember that only inaccurate information can be removed. In fact, the CRAs are allowed to ignore requests that they consider frivolous.

Using Credit Repair — Inaccurate Information Only

You mention that you have already contacted a credit repair company, Lexington Law. I suggest that you read carefully the contract with them and compare that to the FTC’s recommendations. Credit repair companies can help remove inaccurate items only. If the strategy is to send a dispute in the hope that the company does not respond and therefore the CRA will pull the account from the file, this does not seem a wise strategy.

In your case, the Nelnet account is an active account with ongoing payments. The lender will continue to report this account. Secondly, you admit that the account was delinquent, so it is not a question of inaccurate information.

I recommend you make sure Lexington spells out exactly what it can remove from your credit report and that you pay for services it renders.

Building Your Credit Score After 90-day Lates and Derogatory Items

You have also correctly assessed the situation, that a 90-day delinquency is not the end of the world. Your credit score is based on a number of criteria and your whole credit portfolio: Timely payments are the most important factor, and the lates will hurt your score, in the short run. However, maintaining other credit lines, keeping your credit utilization down, and paying all your other bills (and this one) on time will help to improve your credit score.

If you are considering taking out a mortgage loan in the near future, then monitor your credit score. It is obviously best to wait until your score improves.

Although it is frustrating dealing with your servicer, the ultimate responsibility for making payments on time rests with you, the borrower. It is especially important for students to monitor their loans, including the dates they become due. Often, due to a grace period or deferment period, it becomes unclear when a loan becomes due. Make sure that you track your loan activity with your lender’s (Nelnet) online system. If you are not clear about the terms of the loan, then contact a representative.

Writing a letter to Nelnet explaining your personal situation and the honest error you made in not paying in time will most likely not help solve the problem. However, keep records of your late payments, together with the actions you took to rectify the problem. If a future lender asks about those 90-day lates, you can show proof of how you diligently took care of the problem.

Steps to take to Correct Derogatory Nelnet Record on your Credit Report

Here are some actions I recommend that you take:

1. Anytime you have a deferment or forbearance period get track of the time the loan payments will start.
2. Set up a budget and monitor all of your expenses and payments. Make sure that all of your student loans with Nelnet are included.
3. Make automatic payments for your loan payments.
4. Monitor your credit report. If you have inaccurate information, then dispute it. If the information is accurate then don’t pursue a credit dispute.
5. Check carefully the terms of your agreement with the credit repair company, Lexington Law. In your case, with an active account that has accurate information, it is not worthwhile to pursue a credit dispute. Remember, the credit repair company can only get rid of inaccurate information, which you can also do if you purse the dispute process on your own.
6. Work on improving your credit by continuing to make timely payments, maintain low credit utilization, and having a diversified credit portfolio.
7. Send a letter to Nelnet about the derogatory item and keep records of the actions you took to rectify the situation. Although Nelnet will not correct the late record on your credit report, unless you can show that they were at fault, you will be able to show a lender the actions you took to rectify the situation. In any case, if you maintain a clean record, then over time this blemish on your credit report will become insignificant.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com