Credit Advice

Student loans reported as not in repayment

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Credit Advice

Student loans reported as not in repayment

Dear Experian,

Why does my credit report show the student loans I received last year that are not due to be paid back until I graduate from nursing school in 2009? I thought that the only things that should show on a person’s credit file were negative things or bills that had late payments. Needless to say, I am still in nursing school and will not graduate until 2009, and the loans are not even a year old. I was told by the federal government that the loans were not to be paid back until six months after graduation in 2009.

- IAC

Dear IAC,

Federally guaranteed student loans usually are reported as soon as the loan is granted. However, the status shown for the accounts should indicate they are not yet in repayment or that they are deferred.

When your student loans become due the status will change to indicate they are in repayment. Until then, they simply serve as a record that you have financial obligations that you will repay eventually.

Your credit history includes both positive and negative information. Lenders use your credit history not only to find out if you have a bad record of repaying debts, but also to determine how much debt you already owe.

If you are over-extended, even if you are making all of your payments as agreed, lenders can make a sound decision to decline your application or perhaps charge a higher interest rate because of the risk you might not repay them as agreed.

Lenders also rely on the positive information, such as your on-time payment history, to approve your applications, offer you new credit services, increase your existing credit lines or extend other incentives to earn your business.

Your credit report is not a “blacklist” for blocking your access to credit by showing only negative information. Instead, it is just the opposite. By including a full picture of your credit experience and obligations, credit reporting actually increases economic opportunities and broadens access to credit, homeownership and other financial services for U.S. consumers.

Thanks for asking.

- The "Ask Experian" team

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