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Does Paying Off Students Loans Boost Credit Score?

New Contributor

Re: Does Paying Off Students Loans Boost Credit Score?

Don't worry, technically the loans themselves aren't being invested in anything other than my education. I should've said I took them out to free up other, investable funds, which is more accurate.
Age: 20 | AAoA: 1.1 Years | TU Fico: 725 | EX Fico: 719 | EQ Fico: 693
Last App: 12/09/2013
Message 11 of 18
Senior Contributor

Re: Does Paying Off Students Loans Boost Credit Score?

That is more accurate :-)
Good job,
Technically, that is my position as well
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Message 12 of 18
Regular Contributor

Re: Does Paying Off Students Loans Boost Credit Score?


Commandolam wrote:

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


I used to get that same message even though my utilization is 1-5%. It was the only reason Amex gave for denying my CLI requests. Well my student loans were paid off last month so I will see if I finally get it. I applied for a credit card last week and didn't get the message so I think that's what it is. No change in score though after the loans were listed as closed.

Message 13 of 18
Super Contributor

Re: Does Paying Off Students Loans Boost Credit Score?

It is usually talking about loan balances is too high compared to loan amounts..

IE :a loan that is deferred (student loans) will have a 1000$ balance on a 1000$ loan for months and/or years. So while it says "paying as agreed" the balance never decreases unless you make a payment. Doesn't exactly look great, but could prob be explained in a recon.
Message 14 of 18
Established Contributor

Re: Does Paying Off Students Loans Boost Credit Score?

my wifes fico score dropped from 789- to 750 when her student loan paid off. FICO said lack of installment loan account (diversified account missing) or some crap like that. she has the house and credit cards reporting. The installment (ie. car loans, boat etc) is in my name

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Message 15 of 18
Super Contributor

Re: Does Paying Off Students Loans Boost Credit Score?

It depends on what your score is at. If your score is in 600s, paying it off will most likely help.

 

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Message 16 of 18
Valued Contributor

Re: Does Paying Off Students Loans Boost Credit Score?

I don't recommend paying it off as much as paying it down. YMMV in any situation, but the biggest issue of student loans is the deferment period, so paying down to about 75% or so will eliminate that problem, but still keep an installment account open on the report.

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Message 17 of 18
Senior Contributor

Re: Does Paying Off Students Loans Boost Credit Score?

I actually make small payments on mine when I can.. say $25 - 50 bucks here and there.

 

Im prob going to have like nearly $50k when I graduate. In all honest, I feel pretty comfortable with that debt and confident in my ability to repay it. The interest rates are super low, and the investment in yourself is unbeatable! Mine are all Federal Loans, so they will be even easier to manage.

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Message 18 of 18