This is the story of how I was able to remove student loan late payments from my credit report.
As soon as I found out the amazing travel benefits created by some of the best travel credit cards I was anxious to jump into signing up for new cards and redeeming miles for some amazing trips. Unfortunately, living abroad in the UK had caused a rift in communication between myself and one of my student loan lenders and I wasn’t aware that my in-school deferment had not been applied.
So one day, as I’m getting ready to start applying for some credit cards, I go to and check my credit score and I see it’s in the 500s and showing SIX late payments! (Six loan accounts were considered separate for payment purposes.) Thus, my hopes for getting any kind of worthwhile credit card were pretty much gone and I started to deal with the realization that it would take about 7 years for these negative marks to be removed.
There had to be a way to remove student loan late payments…
I figured that there had to be something that I could do and so I started to do some research and slowly but surely started to gain some hope. The following account is how I successfully used the FTC Advisory Opinion on Section 623(a)(2) to get six late payments removed from my credit report.
First Step: Goodwill Letter
The first thing to know is that these creditors are legally obligated by the Department of Education (DOE) and Fair Credit Reporting Act (FCRA) to report these late payments and are not supposed to change what they report unless what they reported was inaccurate.
So don’t go into this with the mindset that the creditors should just change their mind and do as you ask. With that said, the first step to trying to get these late payments removed is to write a goodwill letter, which is basically just a letter where you contact them and ask them to be sympathetic or understanding to your cause and offer you a second-chance. If you had a traumatic event like a death or illness take place around that time, this is something you probably want to bring up. Still, some have had success with just “fessing up” and admitting that they screwed up.
If you don’t know what a goodwill letter is or what it should look like just do some basic Google research… there are tons of examples out there. But for your reference, I’ve included the goodwill letter I sent below.
- I also have a guide for writing and sending goodwill letters here.
My Goodwill Letter
To Whom It May Concern,
My name is Daniel (DOB: XX/XX/XXXX) and I have an account with XXXX loans (ref #XXXXXXXXXX) .
I recently had an informative phone conversation with a representative of XXXX and was explained why I had late payments reported on my credit score. Back in the fall of 2014, I was under the impression that a notice of deferment was being sent to my loan providers and that I would not have to worry about my existing XXXX loans until the fall of 2015. However, this notice did not arrive to XXXX until December 2014, over 60 days after I had a payment due in September. As a result, the late payment was reported to my credit score.
Letters from XXXX were sent out to my address in XXXX. However, I was enrolled in school abroad during this time and I had issues with my mail forwarding. On top of that, my email and phone number were not updated with XXXX Thus, I was not receiving any communication from XXXX. (I have since updated both my phone number and email address).
I realize that this was not a mistake made by XXXX; but rather, a mistake on my end for not ensuring that the notice of deferment was sent and received promptly. However, after seeking some advice on how to go about the situation, I was informed that creditors, such as XXXX have discretion to remove negative reports in certain instances. I am hoping that XXXX can understand that while I failed to submit a timely payment, I was enrolled full-time and thus eligible for a deferment.
With that in mind, I respectfully request that XXXX consider removing the late payments reported to the credit bureaus. I am fully committed to maintaining prompt payments and am open to enrolling in auto-payments if such an option would help with the requested removal.
Please let me know if you need any information from me.
Thank you for your time and consideration,
The Response to My Goodwill Letter
The goal of the letter was to show that I was: 1) taking responsibility of the late payment and 1) that I was open to do what I needed to do to assure them that it would not happen again. Unfortunately, I was not successful.
The goodwill letter actually backfired on me a bit. They sent me a response back saying that since there was no mistake on XXXX’s account and that I had admitted fault they were not allowed to remove the late payments from my report.
I was very bummed and kind of regretted even sending in the letter since now it looked like I may have made matters even worse by admitting fault on the record. Yet, I wasn’t quite ready to give up and I decided to do a little bit more research just in case.
FTC Advisory Opinion on Section 623(a)(2) of the FCRA
And that’s when I stumbled upon the FTC advisory opinion on Section 623(a)(2) of the FCRA which changed everything.
This advisory opinion basically states that a student loan provider is required to both update and correct information provided to credit reporting agencies when that information is provided. There’s dispute as to whether this means removing late payments entirely from a credit report or merely to updating that the report to reflect that a payment status is no longer delinquent or past due.
There’s a huge difference between the two because in the latter situation your payments may no longer show that they are currently delinquent but in the former scenario your payments are completely removed from your credit score.
Thus, I changed my strategy from employing the nice-guy, apologetic tone (“I screwed up and am sorry”) to going with a more aggressive and authoritative style and actually asserted that this loan provider was in violation of Section 623(a)(2) by not removing my late payments. The below is the letter that I responded to the loan provider with. This time I sent the letter via certified mail.
August 25, 2015
My Name and Contact Info
Loan Provider Contact Info
Re: Late Payment Removal/ Ref # XXXXXXXXXX
Dear Sir or Madam:
This correspondence is in response to the XXXX August 17, 2015 letter I received regarding my goodwill request to have late payments removed from my credit score report. In the letter I was told that such reports could not be removed due to regulations promulgated by the DOE and the FCRA. Contrary to these assertions, by failing to update previously reported information, XXXX is in violation of Section 623(a)(2) of the FCRA.
I have attached an FTC advisory opinion which interprets Section 623(a)(2) of the FCRA. The issue posed in the advisory opinion is how a lender is to handle a situation when subsequent information updates a report that was allegedly accurate when it was made but no longer is accurate in the present time (i.e., the identical situation I am currently in).
The advisory opinion states that the Section 623(a)(2) of the FCRA addresses the duty to correct and update information by “furnishers,” or persons who furnish information to consumer reporting agencies (“CRA”) such as credit bureaus. In particular, this section requires a person that “has furnished to a consumer reporting agency information that the person determines is not complete or accurate” to “promptly notify the consumer reporting agency of that determination” and provide any information needed to make it complete and accurate. Thus, on its face, this provision requires a furnisher to provide corrected or updated information to the consumer reporting agency that it had reported to originally. This duty extends to all student loan accounts reported to CRAs, regardless of whether they were accurate at one point, because the section requires the furnisher both to “update” accounts as well as to “correct.”
XXXX representatives told me that because the delinquent payments were accurately reported in November of 2014 that any subsequently initiated deferments would not allow for XXXX to update reports to CRAs to show that the payments were not late and actually in deferment. However, Section 623(a)(2) clearly shows that the reports must be updated/corrected regardless of whether they were accurate at one point.*
All of my XXX accounts that were part of the September 2014 late payments show deferment status effective as of “9/15/14.” Also, I was enrolled full time before any payment in September became due. Therefore, my credit reports do not currently accurately reflect previous payment statuses with XXXX, both as they actually existed and as XXXX has recorded them. I am thus requesting that in compliance with Section 623(a)(2) of the FCRA that the six accounts showing a 60-day late payment in November 2014 be updated and/or corrected and removed.
In the event that these reports are not immediately updated to accurately reflect my payment status during November 2014, I intend on filing disputes with each credit bureau in addition to official complaints with the FTC, CFPB, BBB, and pursue other legal routes if necessary.
Please respond within 14 days of the date of this letter with an update to this matter.
Very Truly Yours,
[*Footnote: For the record, I do not agree that XXXX ever “accurately” reported the status of my loans. Since my July 28th email, I have discovered that all other loan providers timely processed the deferment leaving me to suspect a processing error on behalf of XXXX. In addition to the possible Section 623(a)(2) claim, I intend on disputing the processing of my deferment if need be.]
As you can see, the tone was much different from the email I had previously sent. There are a few points to consider about my situation and the letter I sent.
- I sent the letter as an attorney (e.g., I signed “Name, Esq.”). That representation in addition to the attaching the Advisory Opinion and supplying my own quasi-legal analysis of that opinion could’ve played a role in lending more gravity to my argument.
- The footnote above was meant to let them know that I no longer suspected the error to be my mistake (as they reiterated in their original response to my goodwill letter). Since other loan providers had timely processed my deferral (which was not sent from me) I thought I had a good argument that they were the outliers and likely the party who made the mistake.
- Keep in mind this was for an in-school deferment — it was indisputable that my loans qualified for deferment. I say that because there may be some differences if you are trying to argue that your loans should’ve been in forbearance or some other status allowing for delayed payments. I don’t know that for sure, however. It may not make a difference but that is just something I’m saying to take note of.
The Response to the Advisory Opinion Letter
In a couple of days I received a letter via snail mail that upon further consideration my payment history was being revised!
Within a few days I logged in to check and my credit report for another matter and noticed it had shot way up — they had removed my late payments! And what was great was that my credit score had made an astronomical leap. The removal of the late payments coincided with me paying of all my credit card debt and a slew of hard-pull inquiries dropping off my report so my credit score jumped from the 500s to the 800s! I couldn’t believe the change and I was on my way to getting some pretty great credit cards.
When you research the authority of Section 623(a)(2) and this FTC advisory opinion you’ll come across a lot of varying accounts and opinions. There are a lot of accounts of using this opinion not working and some others who have had success like I did. Don’t get too discouraged by the negative accounts. I almost never sent in my second letter because it seemed like a wasted effort but thank God that I did… I don’t even want to think about where my credit score would still be right now if I hadn’t.
If you have some late payments that hit while you were supposed to be in an in-school deferment status or in forbearance then I definitely recommend giving this method a try. Try the good-will letter first and if that doesn’t work then you’re next step could be using the FTC advisory opinion Section 623(a)(2). Remember, there’s no harm in trying.
Other ways your credit score a boost
One thing to know is that it can be extremely difficult to get some large financial institutions to remove student loan late payments from your credit report. And since payment history is such a heavy factor for your credit score, you may want to explore other easy options for improving your credit score.
In many cases, your best route might be to take an alternative approach to rebuilding your credit with credits.
If your credit is in really bad shape then you want to look into credit cards for bad credit but if you’re score is a little better you can look into credit card options for fair credit. If you responsibly manage these credit cards, then over time your credit score will increase.
Feel free to contact me if you need help with finding the right credit card to start building up your credit again.