@Anonymous wrote:
I have a $3,600 student loan with 3.15% (my parents only made me take out 4,500 loan to help build my credit)
I only have to pay $50/mo(about 40 goes to principal and 10 to interest) until 2024. but I do have liquid cash to pay it off entirely. it would just take a dent in my savings for the downpayment.
I have no other debts or expenses (living with parents as a means to save up for a downpayment)
Will paying off this installment loan affect my interest rates for my mortage (I plan on getting a home within 1.5-2 years.)
My fico has been between 750-790 for past few years.
Ive heard that paying off student loans will significantly decrease your credit score, if true, for how long??
A student loan is categorized under installment debt. I can't remember if it's the Equifax or Experian mortgage model that cares about installment debt. Your FICO08 scores will definitely drop because that scoring model likes it when you have open installment loans reporting on your credit.
Another thing to consider is, if you pay off that student loan and that's the only tradeline you have on your credit, you will eventually lose your credit score altogether because you won't have anything reporting to generate a score.
Do you want to pay off the student loan to lower your DTI? If not, I would leave it alone and consider getting at least 2-3 credit cards now so you can have some credit mix.
