Please Help ,,,,,Question about deferred student loan!!!!!

[NEEDCREDITADVISE]

If I defer my student loan payment due to hard ship will it reflect negatively on my credit reports?

[SCF]

As long as you don't miss any payments (keep paying until you have paperwork in hand that says you have your deferrment), it will have no negative effect.  Your loan will say "Pays as Agreed" every month and in the notes for the account the lender will usually note that your payment is deferred.

[Anonymous]

I just checked my TU credit report because I was curious and now I'm a little puzzled.

My understanding was that my student loans were deferred and therefore have absolutely no impact on my credit score until they become "live" after my 4 years is up.

However, my report says something entirely different. Of the 4 reasons why my score is a little low, 2 of them had to do with my "non-mortgage credit accounts".

This is what it says:

Reason #2:

Your FICO score weighs the balances of your non-mortgage installment loans (such as auto or student loans) against the original loan amounts. In general, when you first obtain an installment loan your balance is high, and as you pay this loan down, the balance decreases.

Keep in mind: This factor will have less of a negative impact on your FICO score as you pay down your installment loans and the total balance decreases.
Tip: FICO High Achievers have paid down an average of 35% of the principal on their installment loans.

Reason #4:

Your FICO score considers how much you owe on your credit accounts, such as revolving credit accounts and non-mortgage installment loans. Generally, the more you owe on these accounts, the greater risk you pose to lenders.

What to do about this: You should try to pay off your current debts and maintain low balances. However, consolidating or moving your debt from one account to another will usually not help your FICO score since the same total amount is owed.

Tip: Most FICO High Achievers carry a total balance of less than $1200 on non-mortgage accounts.

Reason #4 especially worries me because I'm definitely going to be around that national average $19,500 in loans when I graduate... And that's when I actually graduate in 3 years. It's only going to grow and grow for those 3 years and it's already impacting me now.

It's deferred, that's for sure. I haven't had to pay anything and I don't have any negative marks on my history for that. Should I be talking to companies to make sure they realize they're deferred or is everything correct and I just misunderstood the impact that my loans would have on me?

Message Edited by SeanDEE on 01-27-2009 11:28 PM

[SCF]

Hey Sean,

Folks around here have found that utility on installment loans have a very small effect on your scores, especially when compared to revolving utilization, so I wouldn't worry about these dings.  I got these comments on my report while carrying ~$18k in SL debt and a ~$4k auto loan, and they went away after just a few months of payment on the auto loan, so I think it may just be lik 99-100% utilization that triggers those comments and the slight score ding.

If your loans show "Pays as Agreed" and say deferred or something similar in the comments, they are reporting correctly and not doing any significant harm to your score.

Hope that helps!