The Biden administration is warning credit reporting agencies and credit score companies not to ding student-loan borrowers over missed payments as millions resume paying their debt after a more than three-year pause. “I write to strongly urge you to revisit how your company will treat federal student loan obligations for purposes of credit reporting and credit scoring during the return to repayment,” Richard Cordray, the chief operating officer of the Office of Federal Student Aid, wrote in a letter the agency is sending to the companies Tuesday.
In particular, Cordray wrote that it would be “inappropriate” for credit-scoring models to rely on things like a small uptick in loan balance due to interest accruing, periods of forbearance, monthly payment amount or other signs of a reduced or missed payment, as a sign of creditworthiness during this period. “These actions are taking place in a fundamentally different context than any other time and are a substantially less reliable indicator of unwillingness or inability to pay,” Cordray wrote in the letter obtained by MarketWatch. Is the resumption of student loan payments impacting your credit score? Email us: [email protected]. The letter comes after weeks of complaints from student-loan borrowers and advocates over the resumption of fede …
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In particular, Cordray wrote that it would be “inappropriate” for credit-scoring models to rely on things like a small uptick in loan balance due to interest accruing, periods of forbearance, monthly payment amount or other signs of a reduced or missed payment, as a sign of creditworthiness during this period. “These actions are taking place in a fundamentally different context than any other time and are a substantially less reliable indicator of unwillingness or inability to pay,” Cordray wrote in the letter obtained by MarketWatch. Is the resumption of student loan payments impacting your credit score? Email us: [email protected]. The letter comes after weeks of complaints from student-loan borrowers and advocates over the resumption of fede …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]