02-03-2014 01:51 PM
I posted this already in the rebuilding (so forgive me if you have seen this already - I just wasn't sure where to post)
I recently pulled my credit report from myFICO and one of the Negative Indicators listed is "The remaining balance on your non-mortgage installment loans is too high"
I am currently in graduate school and have about another year and a half left. Therefore, I do not have to pay the loans back until after I graduate, so I am listed as paid as agreed. That being said, with that much more time left to get my degree I have to take out more and more loans every semester until I get my degree. (I can't afford the $2,000 per class)! Why is this hurting my score and listed as a negative indicator? I did not take a break from my undergraduate degree until starting graduate school, so that doesn't affect me having to pay. I'm just worried that if it is hurting now, by a year from now it will be much worse with more loans taken out. I just don't understand how an account that is listed as paid as agreed can be hurting my credit score?
02-03-2014 02:56 PM
If myFICO can't find enough major factors to list as to what's affecting your credit, they'll move on to the smaller ones. Although have installment loans at 100% or greater utilization may take a few points off your score, the impact is very minor compared to utilization on revolving credit, and you likely won't even notice when that factor goes away.
Don't worry about it, the loans are marked paid as agreed, and even if your file were reviewed manually and a potential lender had a question about the balance you have a perfectly reasonable explanation that anyone will accept. Focus on keeping your accounts current, and other areas of building credit, as well as taking the steps you need to so that you'll be able to pay back these loans on time when they come due and your score will improve naturally.
02-03-2014 03:40 PM
Wow, thank you for the information. This is such a relief to hear. It is my second semester of graduate school, so I thought it was going to become much worse as the time goes on and more loans are taken out. During undergraduate I took out very little in loans. Now I am having to take out about 8,000 a semester so I thought it was going to make my score drop a lot since it is listed as a negative factor (even though my score has been going up). So as you said it must not be making that much of an impact. I appreciate the reply.