Make Paid Loans STAY Paid – Part Two

So, is that it? Can you forget your paid-off student loan now that you've stored your receipt and fixed any error if it still shows on your credit record as unpaid?

Just one more thing...

Someday you will need to take out a mortgage, or more loans, whatever. When your new lender asks you to sign borrowing documents, read through it, looking for any list they've made of your current debts.

You may find more student loans listed there than you have left. Or you may find them listed even though they've now all been paid.

In that case, put your pen down. Don't sign until this list is corrected.

You see, your credit record may be correct, but sometimes busy staff at your bank or credit union will misinterpret credit records. They may simply copy from your credit record a list of student loans, without noting that these are now paid.

Here's a real-life example. Jay had to sign for a line of credit. Flipping through the paperwork, he saw – under the title "liabilities" – a list of old student loans he had paid.

He was stunned. And he also felt that this had made him look dishonest with his loan officer. After all, when she'd asked me to list all his liabilities, he hadn't mentioned all these loans because they were paid off. And she didn't say a word to tip him off, She just listed his paid-off loans as liabilities, based on her mis-reading of his credit record.

Jay didn't sign until she removed the fictional loans. If he had signed, it could have set this mistake into stone. Not that he would have to pay the loans again, of course, but having his bank record show him with such a lot of debt would make it harder for him to borrow more money in future.

He asked the loan officer where she'd got her information and she said her source was Equifax. But when he checked, the Equifax records showed the loans as paid. So the error had been made at the bank.

Mistakes are inevitable. The people who handle our records get tired or they just get distracted by ringing phones or the other interruptions of a busy office. In the end, Jay gave his loan officer the name of a clerk at Equifax so she could confirm the correct information. Only when this was done did he sign off on the bank's paperwork.

So how can prepare for student loan record mistakes like the one made by Jay's bank loan officer?

You'll be protected if you:

  • Keep your proof of final payment
  • Check that your credit records are up-dated
  • Now and forever, check your list of liabilities before you sign financial papers.

Hey, you worked hard to pay off that loan. It better not come back!