By Andrew Josuweit, Forbes
Every student loan borrower should know how their student loan debt affects their credit history and credit score — from how much missing a payment could ding their credit score to whether refinancing student loans affects credit at all.
But it’s not just your mistakes that can keep your credit down. According to an April 2017 report from the Consumer Financial Protection Bureau (CFPB), “Non-federal and federal student loan borrowers reported issues of incorrect reporting of their loans to the credit reporting companies.”
Such errors can have major consequences. You might get rejected for other credit or loans or get stuck paying hundreds more in interest. Credit reporting errors could even cost you your dream job or apartment.
But you can catch these errors early — if you know what to look for. Here are five student loan credit reporting errors that can be dangerous to your credit.
1. Student Loans Not Shown
You check your credit report and think, “Didn’t I owe a little more than this? It seems like something’s off.” But you shrug it off because owing less than you expected is good news, right?
Not so fast. The loan might have disappeared from your credit reports because your student loan servicer made a reporting error or failed to report it.
It happened to me. Two of my original 16 student loans never showed up on my credit reports, and in the chaos of graduating and starting my post-college life, I lost track of them. Despite the fact that the loans weren’t reported on my credit history, however, I was responsible for timely repayment.
I found out about my “missing” student loans in the worst way — with default alerts from my servicer. This credit error cost me thousands in collection fees and damaged my credit for several years.
2. Student Loans Listed Twice
Sometimes, you’ll see the opposite error — instead of a missing student loan, you have a duplicated debt.
That doesn’t mean you suddenly owe twice as much, though. It just means the credit bureau somehow recorded the loan two times (maybe more). Duplicate student loans on credit reports might even have different names or labels, which can make them tricky to spot.
Having duplicate student loans on your credit report can seriously mess up your finances. This error makes it appear to credit bureaus and lenders that you have more debt. With the average student debt at $37,172, even one duplicate loan can make it seem like you’re deep in debt.
“It will likely lower your credit score and lead lenders to give you loan offers with higher interest rates and less favorable terms,” according to the CFPB.
3. Student Loans That Don’t Belong To You
What if the student loan listed looks completely unfamiliar? In another common credit reporting error, student loans someone else took out might end up on your credit report.
This mistake can happen if consumers have similar identifying information, such as names or Social Security numbers. In some cases, the lender reporting the account or the credit bureau might mix up the two consumers’ information in what is called a “mixed file.”
The result could be a student loan listed on your credit report that actually belongs to someone else. If you notice this issue, resolve it quickly — or it could damage your credit just like a duplicate loan.
There could be a more sinister explanation for that mystery student loan — identity theft. A thief might use your stolen identifying information to take out a fraudulent student loan in your name. If you’re the victim of student loan fraud, you need to take immediate action to limit this threat and remediate the damage.
4. Student Loan Account Info Is Incorrect
It’s not uncommon for credit reports to list student loan account information incorrectly. Common student loan account errors include:
- A student loan you paid off is counted as active.
- Student loan accounts you closed are marked as active.
- The balance shown on your credit report is different from what you actually owe.
- Student loan accounts reflect incorrect dates on loan origination or payments.
5. Student Loan Incorrectly Marked As Delinquent Or In Default
Lastly, credit report errors can include derogatory marks — or signs of bad borrowing behavior — on your student loan accounts.
Even if you’re managing your student loans properly and have never missed a payment, your positive history won’t matter if it’s negated by one of the following errors:
- A student loan payment falsely reported as late
- A student loan erroneously listed as delinquent
- A student loan listed as in default when it’s actually deferred or in forbearance
In the case of student loans inaccurately listed as in default, “the credit damage is substantial,” said Mark Billion, a bankruptcy lawyer and founder of bankruptcy filing tool Bankruptcy Anywhere.
“[It] can jeopardize many borrowers’ future plans,” he added. “Not to mention other issues like wrongful tax offsets and inability to secure additional educational financing.”
7 Ways You Can Find And Fix Student Loan Credit Reporting Errors
You might not be able to prevent student loan credit reporting errors. Ultimately, it’s up to the student loan servicers that report the data and the credit bureaus that collect it.
However, you can follow the steps below to find errors and get them corrected.
1. Compare reports from all three bureaus.
Through AnnualCreditReport.com, you can request free copies of your credit reports from the three major credit bureaus. Check and compare all of them so you can easily spot any discrepancies.
2. Check your credit reports often.
By looking at your credit reports regularly (once a year is recommended), you can spot reporting errors on your student loan accounts early. You’ll also build a record of past credit reports, against which you can cross-check current reports.
3. Verify federal student loans against government records.
When you check your credit reports for the first time after graduating, you’ll want to make sure all your student loans are there. Find your student loans in the National Student Loan Data System (NSLDS) and cross-check those accounts against the ones listed on your credit reports.
If you find a student loan you don’t think is yours, investigate further. “The consumer should ask for all the original loan documentation from the servicer to verify it was for a school they went to and at a time that they were attending,” Billion said.
4. Reach out to your student loan servicer first.
“Contact the loan servicers as soon as [you] see an error,” Billion advised. “Since the reporting agency will verify with the servicers, contacting the servicer is the most important part.”
5. Dispute the error with the credit reporting company.
Current laws give you the right to dispute and correct errors listed on your credit report. The first step is to send a letter to the credit bureau identifying the incorrect information. Use this form letter from the Federal Trade Commission (FTC) as a starting point.
The credit reporting agency has 30 days to investigate the matter, working with your servicer to evaluate the accuracy of your claim. Upon completing its investigation, the credit reporting agency must send you a letter with the conclusion and a free copy of your credit report.
6. Add a statement of dispute to your credit report.
If your credit report dispute is unsuccessful, you have other options.
First, “you can ask that a brief statement of the dispute be included in your file and included or summarized in future reports,” according to the CFPB. This statement will provide context for the information you claim is incorrect and might give you a chance to make a case for yourself with lenders.
7. File a complaint with the CFPB.
You also might try to enlist the help of the CFPB to work with your student loan servicer and the credit reporting company to resolve your issue. To do so, file a complaint with the CFPB. The CFPB will forward your complaint to the credit bureau in question, which is required to review the complaint and respond within 15 days.
Student loan credit reporting errors pile more hassle and worry on top of stressful student debt. If you’re like me, you probably feel like you shouldn’t have to go through all this work for a mistake you didn’t make. Still, catching an error will give you the chance to fix it and restore your good name, positive history, and peace of mind.