Credit Dispute- Score dropped 300 pts overnight

13 Replies

I've always been extremely diligent about my credit. Nearly everything is on autopay.

Last year, I had my student loans deferred because I had to stop working due to disability. Technically, I did that over the phone in October of 2016. Since I check my credit score regularly, I discovered in March of 2017 that my student loans, that I thought were in deferment, were past due. That deferment only lasted 3 months!

I immediately contacted the loan company, but they said there was nothing that could be done about it. I had consistently made payments every month for years, but stopped my autopay when I thought I know longer needed to pay.

My credit score went from mid 700's to the 400's overnight!! I have about 14 student loans (never consolidated because many had great interest rates) and all of them were reported as being in default.

As you can imagine, I have no idea how to finance a deal without seller financing. How long will it take to build my credit back up? I'm up to low 600's now, but how do I speed the process up?

@Angela Meraklis-Lyons

I'm so sorry to hear about your unfortunate circumstances. I feel as though speaking with a lawyer may be something to look into. 

On the building credit front, I would login into mint they offer a free service in regard to your credit cards and help you monitor your credit on a monthly basis. I had zero credit 2 years ago and with just two credit cards I've gotten up to a +770. So I'm certain at the very least you should be able to get back to the 720 range in a year or two. 

Maybe @David Dachtera could chime in as he had previously helped me on the topic.

Originally posted by @Angela Meraklis-Lyons :

I've always been extremely diligent about my credit. Nearly everything is on autopay.

Last year, I had my student loans deferred because I had to stop working due to disability. Technically, I did that over the phone in October of 2016. Since I check my credit score regularly, I discovered in March of 2017 that my student loans, that I thought were in deferment, were past due. That deferment only lasted 3 months!

I immediately contacted the loan company, but they said there was nothing that could be done about it. I had consistently made payments every month for years, but stopped my autopay when I thought I know longer needed to pay.

My credit score went from mid 700's to the 400's overnight!! I have about 14 student loans (never consolidated because many had great interest rates) and all of them were reported as being in default.

As you can imagine, I have no idea how to finance a deal without seller financing. How long will it take to build my credit back up? I'm up to low 600's now, but how do I speed the process up?

 I don't use my personal credit for any house that I buy. I don't know my credit score and couldn't care less. I use "Subject To", Wraps, Lease Options, Owner Financing. Put those terms in the Search box above to learn more. Besides, Autopay is a trap and a big mistake. Wells Fargo just announced that they somehow "overpaid" accounts on AutoPay until the accounts were empty and then their customers were charged overdraft fees.

http://www.charlotteobserver.com/news/nation-world...

If you have credit cards, keep the balances as low as possible. Also see if you can have your credit line increased for each card without them pulling your credit/hard inquiries. 

Achieving both of these can help your score in a few ways.

Also, keep your oldest account open. Keep making on time payments. Avoid opening up new accounts.

Sometimes the loan company will write a letter on your behalf to the credit agencies explaining the error and that can help clean up your record.

I don't recall but if you are going to meet with a lawyer I think the statute of limitations on an action for incorrect credit reporting is very short- like 1 year. May not want to wait too long if you think meeting with a lawyer is an option.

There is a dispute process with the credit reporting agencies. I’ve never been through the process, so I can’t say how easy/hard it is, but I’d start off with a letter to them following their dispute process.

You’ll need some kind of proof or backup. Did you get any letter or anything from your loan providers? Did they start re-billing you? I’d imagine if you didn’t get any bills, that’s a good first start.

But honestly I think you need more proof than you’ve provided us here. But it doesn’t hurt to try.

@Mike McCarthy - depending on the agency, I think the dispute process is pretty easy. I believe it's just  an online form.

Sorry to hear that happened Angela!  People take hits all the time, so it's not the end of the world. It will definitely hurt you in the near-term unfortunately, but once a few years pass it should not matter as much if you're taking the steps to repair it now. In the interim, I would collect as much documentation around this to support what happened (around your disability, any confirmation that you applied for deferred (perhaps they have records of this they can provide to you), and anything else you think is beneficial here). That way when you apply for a loan, you can submit this either with your letter of explanation regarding your credit report where this will come up or by being proactive at the outset and letting the loan officer know.  Depending on the type of loan / type of lender they may accept the documents you provided and proceed without issue (providing you meet their other criteria).

All 14 loans were with the same company? I cant imagine that 14 separate companies all made the same mistake.

Russell Brazil, Real Estate Agent in Maryland (#648402), Virginia (#0225219736), District of Columbia (#SP98375353), and Massachusetts (#9​0​5​2​3​4​6)
(301) 893-4635

@Angela Meraklis-Lyons   If this truly was a mistake on the part of the student loan company, and they told you that your loans were in deferment for a longer period than they actually were, the best thing you can do is have them extend the deferment in their system, and get the error corrected on your credit report.  It will be a lot of work, but erasing that error will be the best thing for your credit score!  Keep calling until you reach someone who will help you.

I think you can dispute easily in credit karma 

FYI: 

- Disputed accounts do not factor into FICO scoring algorithm. Happy face.

- You cannot get a mortgage with actively disputed accounts. Sad face.

Disputes as an "insta solution" can work as a trick for tenant applicants, but not mortgage applicants. 

The official answer from the mortgage industry is that all disputes with existing creditors must be resolved prior to getting the mortgage. You can basically 'give up' disputing, but then your FICO will drop right back down.

Chris Mason, Lender in CA (#1220177) and California (#1220177)
415-846-9211

How much are the student loans? Why not pay them off first before you invest. Debt such as students loans aren’t bankrupt able and hold you back especially when you don’t have any money. Or do you have large savings.

Go to creditboards dot com . Their forums are gold in regards to learning about credit and what and how you can dispute certain things. 

Some years ago I even sued equifax in small claims court and won, because they refused to update something, even with proof. 

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