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So whenever I got a new card, there'd be a piece of mail sent to me telling me things that adversely affected my credit score. One of the things that come up that I'm not sure about is high debt to credit limit ratio or something like that. I'm sure they don't mean my credit card debt which is like 4% of my total limit. Do they mean my student loans?
They're deferred until 2016 and subsidized so I took them out to invest with, but are they negatively affecting my credit card applications? I can pay them off in full right now. Is it worth doing so before I apply for higher tier cards like CSP or request a big credit limit increase (3x Amex CLI)?
Edit: Title
Debt reduction is always a good thing.
If you have the means why not just pay them off, since interest will accrue even while deferred? If your investments are earning more than you are paying in interest, you may want to pay over time rather than all at once. You are the best judge of your financial picture.
Trust me, as a college student myself, if you can make a payment to your student loans (whatever the amount), do it! Don't pull if off. Of course, if you can't, then it's okay, but really try to reduce your debt any how you can.
@FocusedAndDetermined wrote:Debt reduction is always a good thing.
If you have the means why not just pay them off, since interest will accrue even while deferred? If your investments are earning more than you are paying in interest, you may want to pay over time rather than all at once. You are the best judge of your financial picture.
Subsidized means the Federal government is paying the interest. The OP has no obligation to pay the interest while they are in school or in period of deferment.
@andre181 wrote:
@FocusedAndDetermined wrote:Debt reduction is always a good thing.
If you have the means why not just pay them off, since interest will accrue even while deferred? If your investments are earning more than you are paying in interest, you may want to pay over time rather than all at once. You are the best judge of your financial picture.
Subsidized means the Federal government is paying the interest. The OP has no obligation to pay the interest while they are in school or in period of deferment.
Correct - overlooked that detail.
@FocusedAndDetermined wrote:Debt reduction is always a good thing.
If you have the means why not just pay them off, since interest will accrue even while deferred? If your investments are earning more than you are paying in interest, you may want to pay over time rather than all at once. You are the best judge of your financial picture.
Thanks for your input. Ignoring the interest and investment thing, would you say having a student loan balance is why they keep saying my total debt to limit is too high?
@Commandolam wrote:
@FocusedAndDetermined wrote:Debt reduction is always a good thing.
If you have the means why not just pay them off, since interest will accrue even while deferred? If your investments are earning more than you are paying in interest, you may want to pay over time rather than all at once. You are the best judge of your financial picture.
Thanks for your input. Ignoring the interest and investment thing, would you say having a student loan balance is why they keep saying my total debt to limit is too high?
That would be my guess, since you state your utilization is around 4%. You can wait for a response from a more seasoned expert, but I have the same notation on my reports, and my utilization is at or below yours. My installment loans are the only accounts with "high balances", but are way down from starting point. I pay well above the required amount.