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Federal Def. of "Adverse" Vs. Grad PLUS Loans Help


CleverCynic
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Hi I was wondering if there are any experts out there who can clarify the federal definition of adverse as it relates to the practical setting of getting a graduate PLUS loan.

The federal definition basically looks for any late pays or defaults in the last 5 years. I was wondering how the purchase by junk debt buyers affects old C/O's from older than 5 years ago.

So if I have a C/O more than 5 years ago, but a CA buys it in 2005 and that is the Account Open date, is this going to affect my eligibility for a Grad Plus loan?

I've not paid anything late or defaulted on anything for about 6 years but want to plan for a strategy if needed by July to make sure I get approved.

Thanks!

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What is adverse credit?

A GradPLUS loan applicant is considered to have adverse credit if any of the following conditions apply:

• The applicant is 90 days or more deliquent on the repayment of any debt

• The applicant has had any debt discharged in bankruptcy during the 5-year period before the date of the credit report

• The applicant has been the subject of a default determination on any debt, a foreclosure, a tax lien, a repossession, a wage garnishment, or a write-off of a Title IV debt during the 5-year period before the date of the credit report

• The Lender must obtain a credit report on the borrower from at least one major credit bureau

• If a student is turned down for credit, the student may chose to appeal the decision to the individual's lender (each lender will have a different appeal process) or re-apply with an Endorser

• The absence of a credit history is not considered adverse credit

The FIRST line is the most concerning. Is a 6 year old C/O 90 days past due?

Edit: another definition:

Debts more than 90 days past due

Unsatisfied judgments

Unpaid collection accounts

Evidence within the past 5 years of bankruptcy default, foreclosure, repossession, tax lien, wage garnishment or write-off of a Title-IV student loan debt .

This one includes "unpaid collection accounts" and doesn't specify a time-frame. So it would seem that "no adverse credit" means this loan requires outstanding credit, no evidence of ever having missed a payment on anything, ever. Even a FICO score is more forgiving than this!

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Yes, it's $103 unpaid to cingular. I'd LOVE to pay it, but it's due to fall off this time next year and it would be a terrible credit repair strategy to renew the 7 year listing now. Unfortunately I've not pulled a credit report in about 5 years between schools and moving.

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