Derogatory Entry on Credit Report by Nelnet

Federal law (US Code Title 15, §1681c) controls the behavior of credit reporting agencies. This law is known as the Fair Credit Reporting Act (FCRA). Under FCRA §605 (a) and (b), an account in collection will appear on a consumer's credit report for 7½ years. The clock starts approximately 180 days after the date of first delinquency on the account. To learn when an account will be removed by the credit reporting agencies (TransUnion, Equifax, and Experian and others), add 7½ years to the date of first delinquency. Subsequent activity, such as resolving the debt, is irrelevant to the seven-year rule. However, if the debt is a tax lien, that can appear for seven years from the date of payment. A bankruptcy will appear for ten years from the date of the final order. Delinquent federal student loans can be reported indefinitely, i.e., for as long as they are delinquent.

What does FCRA mean to you in the situation you described? As you mentioned, Nelnet reported derogatory information to the credit reporting agencies because of your delinquent payment. Under the FCRA, accurate derogatory entries can remain on your credit report for seven years.

You mentioned Lexington Law. Lexington Law Firm disputes derogatory items on a client's credit report. Under the FCRA, when a credit reporting agency receives a dispute, it is required to go back to the reporter to verify the offending entry. If the reporter fails to respond, the credit reporting agency is required to remove the offending entry from the consumer's credit report.

Under the FCRA, the credit reporting agencies are allowed to ignore disputes it considers frivolous. Therefore, Lexington Law is methodical and, to an outsider's perspective who does not understand the FCRA, slow in sending dispute letters. This is because if Lexington Law fires a salvo of dispute letters about one consumer's account all at once, each dispute may be consider frivolous, thus defeating the purpose of the dispute.

Lexington Law Firm cannot create miracles. Should the reporter verify the debt to the credit reporting agency, then the derogatory item will remain on the consumer's credit report.

Recommendation

You mentioned refinancing the loans to remove the original accounts from your credit record. Credit records do not function that way. As mentioned in the first paragraph of my answer, a derogatory mark on an account is a derogatory mark, and an accurate derogatory mark can stay on a consumer's credit score for 7½ years whether the account is open or closed.

You also mentioned recontacting Nelnet to request it remove the offending derogatory marks. It cannot hurt to try, but there is nothing in it for Nelnet to cooperate. Nelnet provides student loans, and unless you refinance the loan with another bank, you have no leverage over Nelnet nor has it an incentive to provide a positive customer experience.

One final thought. This derogatory is one black mark on your credit history. Its effects will fade with time, and with your positive activities on other accounts.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com