Keeping student loan open for FICO score

unc0mm0n1 · ‎11-10-2014

I my grace period ends in 5 days. I have the cash to pay off all of my loans but I was thinking about paying all of it except for 50 dollars and then paying I like a couple of dollars a month to just keep it open. Would this be good for my FIco score? The loan is one of my oldest reporting accounts and I've seen on here that your score drops pretty big when you pay off the loan. Does this make sense or am I just over thinking it?

Last App March 23, 2015. Gardening until November 25, 2015
Current Score: 766 EX 734 EQ 780 TU 6/30/2015Starting Score/Goal Score: 580s/780s across the board

Anonymous · ‎11-10-2014

Do this or open another installment loan.

Tazman81 · ‎11-10-2014

This "may" (and i use that term lightly) only be important if you are thinking about applying for a mortgage soon where many lenders look for current installment payments. Otherwise the account stays on your credit for 10 years showing a good payment history. Pay off the loan so you can save yourself the interest and concentrate on paying any other bills you may have and/or maybe save for purchasing a home in the future and/or for a 401k retirement.

Current Score: Eq: 823 Tu: 830
Goal Score: Eq: 850 Tu: 850
Wallet: PenFed Power Cash 50k | AMEX Blue Cash (AU) 49.5k | Cap One QSMC 26.5k | AMEX Platinum NPSL | USAA Signature Visa 25k

NegotiatorRogerSmith · ‎11-14-2014

@unc0mm0n1 wrote:
I my grace period ends in 5 days. I have the cash to pay off all of my loans but I was thinking about paying all of it except for 50 dollars and then paying I like a couple of dollars a month to just keep it open. Would this be good for my FIco score? The loan is one of my oldest reporting accounts and I've seen on here that your score drops pretty big when you pay off the loan. Does this make sense or am I just over thinking it?

Watch out for a possible minimum monthly payment (e.g. $25) that would basically prolong the life of the loan 2 months (using the given example), which is pointless.

After you find that out, strategize what new accounts you're considering could benefit from the higher score. If there are a few, line them up accordingly and stretch out the repayment that far. It's a shame accounts drop off 10 years after being repaid, and I don't mind throwing away a few dollars in interest for the sake of displaying the ability to repay a material debt obligation to a creditor, than an arbitrary one you might find yourself opening for the sake of a few points boost.

Might as well make those loans work for you somehow.