College and University Blog
Sallie Mae Mistakenly Hurts Credit Scores: Does Your Credit Score Matter?
Announced today, Sallie Mae, one of the larger student loan lenders, has make a tiny computer error which has caused mayhem among borrowers. The problem is that through a simple computer management mistake, Sallie Mae destroyed the credit scores of plenty of their borrowers.
Sallie Mae reports that the credit problem was fixed on Tuesday evening, but some damage could have been done.
Sallie Mae is the largest lender of student loans. What should have been a routine update of credit records turned into a huge mistake when a report erroneously placed delinquency noticed on the credit reports of thousands of its borrowers.
The loans were reported as being partially paid, rather than reporting these graduate and extended repayment plans on time. Equifax, the credit agency that received the problematic reporting, made the delinquency notices on the borrower’s credit reports, as it normally would.
Sallie Mae’s mistake cost many of the borrowers FICO scores to drop significantly, in some cases by as much as 100 points. The problem was first reported by Bankrate.com. While less than 1 million people were affected, which is just ten percent of the organizations customers, the error could potentially have effected any loan applications or credit inquiries that happened in the last several days.
What’s Your Credit Score Take?
The question becomes, then, does it matter what your credit score is as a student? Once you graduate and wish to purchase a car or a home, or even get a job, the credit score will affect you. But, as a college student, do you think about, plan for or are you even concerned with what your credit score is?
For some college students, student loans are only a small portion of the credit building world they live in. Credit card offers are consistently found throughout college campuses. With the allure of a free meal, a fun t-shirt or just the ability to get approved right away, many college students are all too happy to pick up another credit card. That could be a costly mistake though.
The alarming rates of credit cards issued to college students can cause some worry. While Sallie Mae and their loaning opportunities for student loans often offer a very low interest rate, the same can’t be said for credit card companies offering college student loans. Here are some stats that bring home the costs to students.
•The average balance on credit cards owned by college students is $885
•45 percent of students carry a balance on their credit cards each month
•The average student has 2.8 credit cards
•The percentage of drop outs due to financial pressure and debt is 8.5 percent
•The percentage of students who drop out because of academic failure is 6 percent
•1280 colleges are now banning the use of credit card marketing within their establishments.
If you have a Sallie Mae loan, it is wise to go ahead and check your credit report to be sure that all problems have been removed.
If you are considering using credit while at school, the question remains. How worried are you about your credit card score as a college student?