Reply
New Visitor
Posts: 1
Registered: ‎12-03-2012
0

Paying off balance of student loan and its effect on credit score and mortgage pre-approval

I’m prepping to be preapproved for a mortgage and am getting all of my information together. Besides my normal monthly bills (no car payment or rent), I pay about $450/month in student loans.

 

My parents would like to help me with my home purchase and offered to pay off the balance of my student loans (yes, I’m very lucky!) which is about $29K. My question is, how much of an effect would this have on my mortgage preapproval? I’m assuming it would boost my credit score, which is already solid, but how significant of a difference would it make? I have no other debts.

 

I’m sure more information would help this forum provide a more accurate answer, but was just hoping to see how beneficial the elimination of student loans would be.

 

Thanks in advance for your help.

Valued Contributor
Posts: 2,300
Registered: ‎08-25-2011
0

Re: Paying off balance of student loan and its effect on credit score and mortgage pre-approval

Since you dont have any other installment loans, paying these off might actually lower your score.

Copyright ©2001-2015 Fair Isaac Corporation. All rights reserved.   | Terms of Use | Privacy Policy | Sitemap

IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions based on Experian or Equifax data (additional FICO® Score versions based on TransUnion data are not currently available on myFICO.com). Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more

FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.