New Visitor
Posts: 1
Registered: ‎11-21-2012

Why are student loans seen as a negative on credit report?

My report states "The balances on your non-mortgage credit accounts are too high."


Those accounts are my student debts. They are over 100k. Anything I can do with them to reclassify/improve my score?



Moderator Emeritus
Posts: 32,869
Registered: ‎08-04-2007

Re: Why are student loans seen as a negative on credit report?



Did this come from your EQ FICO report? I'm guessing because I believe it is an EQ FICO scoring code. If so, your FICO report will show the top 0-4 things hurting your FICO and the top 0-4 things helping your FICO. These vary based on what's inside your CR. They are ranked in order with the #1 slot hurting the most and the last slot hurting the least, and the same applies for the positive factors.


FICO was developed with input from lenders. A lender tends to be more cautious with someone with a lot of outstanding loans as someone with no outstanding loans. In other words, someone with more debt tends to be more risky financially, even if paid 100% on time. This particular scoring code is very minor and isn't dinging you all that much. In fact, if the SLs are older removing them would likely result in a score drop. FICO really doesn't ding all that much when adding a loan, otherwise everyone would get dinged for adding a car loan, a SL, a personal loan, etc., and that's not the case. I bet that if you paid off all of your SLs tomorrow to $1, the comment will go away but the score wouldn't change. Installment utilization is practically non-existent per FICO scoring. I wouldn't worry about it.

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