Student Loans to show on credit files

Posted in 'Credit Check' by Richard Catlin

10 September 2008

The Student Loans Company’s new online Repayment Portal is now up and running, giving millions of students long awaited access to up-to-date balances.

Until recently, a simple annual statement has been the only way of keeping track of how student debt is either building up, or is being repaid. The new online system gives access to up-to-date balance information and the ability to make online repayments.

It’s not all good news unfortunately. Thousands of older borrowers from the SLC continue to face the prospect of seeing their student loans appear on their credit files.

An official announcement from the Government is awaited and is expected to confirm that student loans taken out on the old system – for loans taken prior to 1998 – will be shared with credit reference agencies and made visible to lenders later this year. Only negative information will be shared. Regular and on-time payments won’t be made visible.

Those students who took loans prior to 1998 are responsible for making payments each month, whereas those on the newer system simply have a percentage taken automatically from their wages each month once they reach a certain threshold of earnings.

Any late or missed payments recorded onto a credit file will have a negative impact on that individuals ability to get other forms of credit in the future - in the same way that missing payments on a standard personal loan does.

The move is not without risk for the SLC, as it has not routinely sought consent from its borrowers to disclose to credit reference agencies as to how loans are being repaid. It is likely that the SLC will restrict the reporting to defaults, where it can claim that the ‘customer/lender relationship’ has broken down and where a default notice served in accordance with the Consumer Credit Act 1974. Even this is a grey area, and if the SLC attempts to go further, for instance by reporting missed payments, it runs the risk of being in breach of the Data Protection Act 1998.

You can see how your credit file looks right now - including your score and rating – on checkmyfile. You can choose to get a one-off snapshot of your file from any of the UK’s three credit reference agencies, or you can choose to monitor all three, every month, for less than £6 a month. Click here for more information.