the student loan view from the credit report cycle presenters
TRANSCRIPT
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The Student Loan View from the Credit Report Cycle
Presenters
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Agenda
Credit reports and scores from the student loan view
The role of credit in personal finance
Credit terms and reporting
Impact of student loans on reports and scores
Strategies for educating borrowers
Helpful resources
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The Role of Credit in Personal Finance
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Credit is an Obligation• Help students understand their obligations
and options as a borrower
Credit is a contract that allows for purchases and services now but pay later with interest
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Good Credit Behavior is Rewarded• Good credit enables students to:
– Qualify for Grad PLUS, private, or other consumer loans
– Receive lower interest rates and fees– Receive lower insurance rates– Buy a home or rent an apartment– Secure employment– Avoid cash deposit requirements
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Review of Credit Terms and Reporting
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Credit Reporting Agencies• Collect and store the
credit records of millions of individuals
• Provide credit reports to paidsubscribers and consumers
• Work together to develop, maintain,and enhance an industry-standardreporting format
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745 Anton Blvd.Costa Mesa, CA
92626(888) 397-3742
www.experian.com
P.O. Box 740241Atlanta, GA
30348(800) 685-1111
www.equifax.com
P.O. Box 1000Chester, PA
19022(800) 888-4213
www.transunion.com
Major Credit Reporting Agencies
250 East Broad St.Columbus, CA
43215(800) 540-2505
www.innovis.com
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Federal Student Loan Reporting• Servicer must report loan
information to the three national CRAs within 90 days of each disbursement– Reported at the account level,
not loan level
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Federal Student Loan Reporting• HEA strongly encourages servicers to wait until
the borrower is at least 60 days delinquent to report to the CRAs
• The “clock” for a 30-day delinquency starts 30 days after the due date
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Credit Report• Credit report summarizes an individual’s
financial history
• Used by creditors to predict risk
Applicant is responsible with personal finances
Applicant is able to handle additional credit
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What the Credit ReportSays About a Borrower
• Which types of credit they use
• Whether they pay their bills on time• How much they owe• How much credit they have available
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Information Found on theCredit Report
Personal InformationName, address, birth date, and employerAccount InformationDate opened, credit limit, balance, monthly paymentPublic Record InformationBankruptcies, judgments, wages garnishments
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Information Found on theCredit Report
InquiriesYour own, from lenders, from employers landlords, etc.
Statements of DisputeAny disputes a person has filed regarding data found on their credit report
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How Long Negative Information Remains on a Credit Report
Delinquencies
7 yearsBankruptcies
7 years for complete Chapter 13 bankruptcies10 years for Chapter 7 bankruptcies
Foreclosures7 years
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How Long Negative InformationRemains on a Credit Report
Defaulted Loans7 years from the date the loan was 30 days delinquent
Collections7 years, depending on the age of the debtbeing collected
Public Records7 years
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Credit Reports from the Student Loan View
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In-School StatusGreat Lakes/U.S. Dept of Education
Address:2401 International LnMadison, WI 53704800-xxx-xxxx
Account Number:44999111100
Address Identification Number:111 11111111
Status: Open/In good standing
Date Opened: 09/2009
Account Type:Installment
Type of Loan:Education
Date Reported:09/2010
Term/Duration: Credit Limit:$0
Monthly Payment: Terms Frequency:Deferred
Highest Credit/Original Loan Amount:$22,000
Date of Last Payment: Responsibility:Individual
Balance:$22,000
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Repayment StatusGreat Lakes/U.S. Dept of Education
Address:2401 International LnMadison, WI 53704800-xxx-xxxx
Account Number:44999111100
Address Identification Number:111 11111111
Status: Open/In good standing
Date Opened: 09/2009
Account Type:Installment
Type of Loan:Education
Date Reported:03/2014
Term/Duration: Credit Limit$0
Monthly Payment:$275
Terms Frequency:Monthly
Highest Credit/Original Loan Amount:$22,000
Date of Last Payment:03/2014
Responsibility:Individual
Balance:$20,459
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Income-Based Repayment StatusGreat Lakes/U.S. Dept of Education
Address:2401 International LnMadison, WI 53704800-xxx-xxxx
Account Number:44999111100
Address Identification Number:111 11111111
Status: Open/In good standing
Date Opened: 09/2009
Account Type:Education
Type of Loan:Installment
Date Reported:03/2014
Term/Duration: Credit Limit:$0
Monthly Payment: Terms Frequency:Monthly
Highest Credit/Original Loan Amount:$22,000
Date of Last Payment:03/2014
Responsibility:Individual
Balance:$20,459
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Delinquent Loan StatusGreat Lakes/U.S. Dept of Education
Address:2401 International LnMadison, WI 53704800-xxx-xxxx
Account Number:44999111100
Address Identification Number:111 11111111
Status: Account past due 90 days
Date Opened: 09/2009
Account Type:Installment
Type of Loan:Education
Date Reported:03/2014
Term/Duration: Credit Limit$0
Monthly Payment:$275
Terms Frequency:Monthly
Highest Credit/Original Loan Amount:$22,000
Date of Last Payment:12/2013
Responsibility:Individual
Balance:$20,459
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Deferment/Forbearance StatusGreat Lakes/U.S. Dept of Education
Address:2401 International LnMadison, WI 53704800-xxx-xxxx
Account Number:44999111100
Address Identification Number:111 11111111
Status: Open/Deferred until 10/2014
Date Opened: 09/2009
Account Type:Installment
Type of Loan:Education
Date Reported:03/2014
Term/Duration: Credit Limit$0
Monthly Payment: Terms Frequency:Deferred
Highest Credit/Original Loan Amount:$22,000
Date of Last Payment:9/2013
Responsibility:Individual
Balance:$20,459
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Paid-in-Full StatusGreat Lakes/U.S. Dept of Education
Address:2401 International LnMadison, WI 53704800-xxx-xxxx
Account Number:44999111100
Address Identification Number:111 11111111
Status: Closed/paid/zero balance
Date Opened: 09/2000
Account Type:Installment
Type of Loan:Education
Date Reported:03/2014
Term/Duration: Credit Limit$0
Monthly Payment: Terms Frequency:Monthly
Highest Credit/Original Loan Amount:$22,000
Date of Last Payment:01/2014
Responsibility:Individual
Balance:$0
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Consolidated Loan StatusGreat Lakes/U.S. Dept of Education
Address:2401 International LnMadison, WI 53704800-xxx-xxxx
Account Number:44999111100
Address Identification Number:111 11111111
Status: Closed/transferred
Date Opened: 09/2008
Account Type:Installment
Type of Loan:Education
Date Reported:06/2012
Term/Duration: Credit Limit$0
Monthly Payment: Terms Frequency:Monthly
Highest Credit/Original Loan Amount:$22,000
Date of Last Payment:03/2012
Responsibility:Individual
Balance:$20,459
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Default StatusGreat Lakes/U.S. Dept of Education
Address:2401 International LnMadison, WI 53704800-xxx-xxxx
Account Number:44999111100
Address Identification Number:111 11111111
Status: Claim filed with federal government
Date Opened: 09/2006
Account Type:Installment
Type of Loan:Education
Date Reported:03/2014
Term/Duration: Credit Limit$0
Monthly Payment:$0
Terms Frequency: Highest Credit/Original Loan Amount:$22,000
Date of Last Payment:06/2012
Responsibility:Individual
Balance:$0
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Rehabilitated Loan• Loan(s) will no longer be considered to be
in a default status• The default status reported by loan holder
will be deleted from credit report• History of delinquencies will remain
on credit report
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Old Loan After Rehabilitation Great Lakes/U.S. Dept of Education
Address:2401 International LnMadison, WI 53704800-xxx-xxxx
Account Number:44999111100
Address Identification Number:111 11111111
Status: Transferred
Date Opened: 1/2007
Account Type:Installment
Type of Loan:Education
Date Reported:03/2014
Term/Duration: Credit Limit$0
Monthly Payment:$424
Terms Frequency:Monthly
Highest Credit/Original Loan Amount:$25,640
Date of Last Payment:03/2014
Responsibility:Individual
Balance:$25,459
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Old Loan After RehabilitatedGreat Lakes/U.S. Dept of Education
Payment history:
2011 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Status - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 30 60 90
2012 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Status 120 OK OK 30 60 OK OK OK 30 60 90 120
2013 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Status 150 180 210 240 270 300 330 360 - - - - - - - - - - - - - - - -
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New Loan After RehabilitationGreat Lakes/U.S. Dept of Education
Address:2401 International LnMadison, WI 53704800-xxx-xxxx
Account Number:5588004444
Address Identification Number:2222222222
Status: Open/In good standing
Date Opened: 1/2014
Account Type:Installment
Type of Loan:Education
Date Reported:03/2014
Term/Duration:
Credit Limit$0
Monthly Payment:$355
Terms Frequency:Monthly
Highest Credit/Original Loan Amount:$25,640
Date of Last Payment:03/2014
Responsibility:Individual
Balance:$25,459
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Credit Scores from the Student Loan View
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Credit Score• A number that predicts the likelihood
of repaying debts on time• Based on a mathematical equation that
evaluates many types of information in the credit report
• FICO is most commonly used model
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Factors That Make up aCredit Score
Source: myfico.com
Payment History• Number of days
delinquent• Time since last
delinquency• Number of delinquent
accounts
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Factors That Make up aCredit Score
Student Loan Impact• Late payments could
drop the score by as much 90-110 points
Source: myfico.com
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Factors That Make up aCredit Score
Amounts Owed• Total amount owed
compared to original loan amount on installment accounts
• Debt-to-credit ratio is calculated
Source: myfico.com
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Factors That Make up aCredit Score
Student Loan Impact • Student loan amounts
are included in overall debt balances
Source: myfico.com
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Factors That Make up aCredit Score
Length of Your Credit History• The amount of time
since credit accounts have been opened
Source: myfico.com
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Factors That Make up aCredit Score
Student Loan Impact • Staying in good standing
will improve their score over time
Source: myfico.com
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Factors That Make up aCredit Score
New Credit• The number and time
since recent inquiries for new credit
Source: myfico.com
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Factors That Make up aCredit Score
Student Loan Impact
Source: myfico.com
• No impact from Direct Subsidized and Unsubsidized applications
• Parent/Grad PLUS application will count as a hard inquiry and may lower the score slightly
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Factors That Make up aCredit Score
Types of Credit Used• Looks at the mix
of credit types in your credit file
Source: myfico.com
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Factors That Make up aCredit Score
Student Loan Impact • Student loans
are a form of installment credit
Source: myfico.com
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Impact of Student Loans on Credit Reports and Scores
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Impact During In-School Period
Loan Application
Credit Repor
t
Credit Score
Direct Sub and Unsub loans (no credit review required)
PLUS loans (credit review required, will show as an inquiry)
Private loans (credit review required, will show as an inquiry)
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Impact During In-School Period
Disbursement
Credit Repor
t
Credit Score
Federal Student loans (reported within 90 days) Private Student Loans (varies by lender)
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Impact DuringPost-Enrollment Period
Repayment
Credit Repor
t
Credit Score
On-time payments
Delinquent payments
Deferment/Forbearance
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Strategies for Educating Borrowers
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Encourage Student Loan Borrowers• Understand their obligations
as a borrower– Utilize NSLDS to keep
track of the federal student loans
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Encourage Student Loan Borrowers• Become familiar with
the information in their credit reports– Consumers are entitled
to one free credit report per credit bureau in a 12-month period
– Official siteannualcreditreport.com
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Encourage Student Loan Borrowers• Choose an affordable
payment plan• Change their plan if the one
they have is not affordable• Make payments on time• Set up auto-debit
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Encourage Student Loan Borrowers• Contact the servicer immediately
– Difficulties making a payment– Change payment due date– Change payment plans
• Catch up on missed payments if theybecome delinquent
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Helpful Resources
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Resources• Annualcreditreport.com
or (877) 322-8228• Myfico.com• Bankrate.com• Optoutprescreen.com
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Thanks for Attending