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PAYE effect on credit

Contributor

PAYE effect on credit

Lets suppose someone has 100,000 in student loans split among 10 loans. The average age is 5 years, but the utilization is near 100% because PAYE payments are 0 a month.

 

Pros,   years of clean payment history.

           Large number of accounts to increase AAoA

 

Cons, high utilizations.

 

How much does the high utilization effect credit scores, compared to the ever increasing AAoA and clean payment record?

 

Message 1 of 7
6 REPLIES
Established Member

Re: PAYE effect on credit

I can't answer all of your questions but if you are paying 0, eventually when interest adds up you will exceed 100% util and it affects your score. I make monthly payments and the interest on my loans has compounded and brought me over 100% of the original loan balance. I believe that is the most negative factor affecting my credit. I have a few 60 day lates that are a few years old but otherwise everything is good. I can't break a score of 700.
Message 2 of 7
Contributor

Re: PAYE effect on credit

I have a auto loan that is about to close, and then my UTI will be over 100% for installments.  I'll see what happens to my scores and post here. Your 60 days are probably affecting you more than you realize, but we will see.

 

 

Message 3 of 7
New Contributor

Re: PAYE effect on credit

Do student loans not count toward UTI until you're in repayment? I have around 40k of loans, but they are definitely not being counted towards my UTI presently. I am due to start paying them in January. Is it going to kill my UTI when I do? Smiley Sad

Message 4 of 7
Contributor

Re: PAYE effect on credit

I don't remember any specific dip when my loans stopped being deferred, so I assume they count before repayment. But I wonder if they don't count for UTI at all, because my scores are pretty darn good for being at 100% with 16 loans. All federal loans, no private.

Message 5 of 7
Established Member

Re: PAYE effect on credit

I misstated above. I have one 60 day late from 2014. Any update on changes in score? Thanks.
Message 6 of 7
Highlighted
Contributor

Re: PAYE effect on credit

I had until recently 2 autoloans mostly payed off.  My next 3B score on the 19th should have my installment UTI over 100% because those are closed and a new autoloan just hit.   I will post my 2 most recent scores to see if there is a dip other than the standard new credit.

Message 7 of 7