If you are just starting to pay back your student loans, you might be hoping that your consistent payment history is contributing positively toward your credit score. But what happens if you are just starting to establish your credit and your private student loan is the only line of credit you’ve opened?
Credit reports contain information about accounts shared by the established financial institutions that work with them. Credit bureaus only include data that is sent to them from lenders and financial institutions.
Here are some options for working with your lenders to have your positive credit habits reported to the credit reporting agencies.
Private Student LoansUnlike private debt where you borrow money from a family member or friend, private student loans are similar to other debts. What makes these loans “private” is that the federal government isn’t involved in making them.
Usually, a private student loan is issued by a bank or other lending institution that will perform a credit check on you when deciding to issue the loan and which reports to the credit reporting agencies as you make your payments. If you have a consistent payment history, which you can get by paying your bills in full and on time, your private student loan could show lenders you’re responsible with your credit usage.
Sending in Payment HistoryEven if your private lender doesn’t have a formal reporting relationship with the credit bureaus, you still might be able to get your student loan included on your credit report. If you don’t see your private student loan included on your credit report, you can call your lending institution and speak with a representative. Ask them to let you know why they don’t share their records with the credit bureaus and if there’s a way the lender can set up a reporting agreement with credit bureaus – you might not be his only customer who wants one.
If your private loan shows up when you check your credit report at one bureau, but not on reports from the others, you can send a copy of the report with the loan to the other bureaus along with a cover letter that asks them to include it. This does not guarantee that the bureau will add the information. However, if you find missing accounts or inconsistent payment history, you can contact the credit bureau(s) and have the information updated.
Using Your Payment HistoryJust because your payment history isn’t on your credit report doesn’t mean that it can’t help you. When you apply for a loan, you can share documentation of your private loan and your positive payment history with the lender and ask that it be considered along with your other qualifications. At worst, it won’t be included and you’ll be in the same position you already were in.
Getting your credit and personal finances off on the right foot is a commendable goal, especially as you graduate college and start building your career. After all, making good decisions about your credit usage can help you when you need it most – like securing a home mortgage or auto financing.
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About the Author
Solomon Poretsky has been a writer since 1996, with experience in the fields of financial services, real estate and technology. Poretsky holds a Bachelor of Arts in political science from Columbia University.
This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.
Published by permission from ConsumerInfo.com, Inc. © 2014 ConsumerInfo.com, Inc. All rights reserved.