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Recently Consolidated - Credit Report question
July 8, 2016
9:57 pm
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I had 7 federal student loans totaling ~$42,000 that had been sent to collections and in default status for several months. I talked to a mortgage broker a few weeks ago and was told the only big issue holding me up from getting qualified for a loan was having these student loans in bad standing. Everything else on my credit report is basically perfect. So I finally bit the bullet and went onto the student loan website and applied for a direct consolidation loan . Fast forward a few weeks, my consolidation loan application has been approved through Great Lakes and they have paid off my old defaulted loans and setup my new income based repayment plan which is set to start August 1. Curious as to what it might do to my credit score, I checked my Experian report today to find my credit score hasn’t really changed at all. It’s showing my new Great Lakes loan with a balance of ~$42,000 with a status of ‘Open’ and payment status as ‘Current’ which is fine. What caught my eye is that my 7 old loans now all show a status of ‘Closed’ with a $1 balance on each and the payment status as ‘Late’. Is this normal for the reporting of old defaulted loans? Or is that some type of error? I don’t know if that is something I should dispute or if it’s correct. I can’t imagine why they would show a $1 balance if they should all be paid off. I just want to make sure they aren’t showing as still in bad default status and hurting my credit. Thanks!

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