FYI: This article is presently inaccurate. For starters, the .gov uses TransUnion. Equifax? 800. TransUnion? 0. BS.
What? The student loan people most definitively use Equifax and Equifax only, see my answer below for more details. You are right on presently inacurrate though, some regulation things changed 6 months ago apparently.
I have some really basic questions if anyone knows - I don't have fantastic credit (college credit card debt, a couple 90-day-lates, etc.) but I have been making consistent and (mostly) on time payments on all of my debt for the last year and a half/2 years now. Will this affect my application or are they only concerned with debt that is currently in collections?
Basically I recently was called and told I had failed a credit test for future student loans. I thought there was a mistake because my credit is good. I called and initiated an appeal and was told I had something under collections. I checked my credit scores and despite my history being near flawless I did have a single $47 collections note from what appears to be 5 or 6 years ago. I have no idea where this came from, and no one ever pursued me for it... I disputed it with TransUnion and Equifax, Transunion got rid of it within a few days, Equifax is still pending. The appeals people said they only use Equifax, but I might be able to offer evidence of the charge being a mistake through my TransUnion report, but if Equifax gets rid of it I'm golden.
I asked them why this was never an issue for my 1L loan, they said that in November or December of last year (2011) the interpretation of their regulations changed. They do not offer loans to anyone with "adverse" credit. Any unpaid collection history, $1 or less, is now considered adverse credit and auto disqualifies you. Although if you can show you are paying it off, or have already payed it off you jump that hurdle. Obviously if you prove that it is a mistake and not debt you are liable for you're in the green. I was just surprised with a near decade of paying credit cards off every month. Paying off a auto loan, and having unused lines of credit and a great overall score a $47 random collection note from many years ago will completely disqualify you unless you deal with it.
To answer your question, they are basically only concerned with collections.