How Often Do Student Loan Companies Update a Credit Report?

Prospective college students everywhere are looking for ways to finance their higher education. Student loans are just one of the many options available to future students to help cover the cost of tuition, books and housing. Repayment of these loans can help students begin their good credit histories on the right foot.

Monthly Reporting

Account statuses on student loans are reported monthly to the three major credit bureaus (Equifax, Experian and TransUnion). Your credit report will list the lender of your loan, the date the account was first opened, the balance of the loan, and when the last payment was made. Timely payments will help a student's credit score rise significantly over the course of the loan, while non-payment will cause a credit score to drop.

Default

A student loan reaches default when payment on the account has not been received in 270 days. During this time period, the lender of the loan will make repeated attempts to contact the student in order to collect on the loan. If no payment arrangements have been made, the lender of the loan may accelerate the loan, which makes the entire balance of the loan, interest, penalties and fees due immediately. Lenders will update the entry of the loan on your credit report as "defaulted," which can seriously damage your credit score and your creditworthiness, making it difficult to obtain credit in the future.

Rehabilitation Programs

Students with defaulted loans have one chance to correct the status of their loans on their credit report. Completing a rehabilitation program will remove the negative status of the loan from the credit report entry and restore it to positive status. Benefits such as deferment and forbearance also are available to the student after the completion of the program. Rehabilitation programs require the student to enroll in the program and make nine consecutive on-time payments. After the program is completed, the loan is returned to the original lender in good status. If payments are not received during the rehabilitation process, the loan is accelerated and the entire balance of the loan is due immediately.

Consequences of Non-Payment

Refusal to repay student loans can be extremely detrimental to a student's credit history, as well as their finances. Actions such as wage garnishment and tax refund collection are common on unpaid student loans. Furthermore, the negative status of the loan on your credit report will drop your credit score significantly, making it nearly impossible to obtain credit in the future.