How do student loans affect you credit score while your still in college?

[Anonymous]

So, I just took out a direct federal subsidized loan for $3,500 and I was wondering how this would affect my credit while im still in school? I have had a Wells Fargo college card since July, and was looking forward to applying for another credit card or two in about 6 months to a year. Will this loan ultimately help or hurt my credit file?

[Anonymous]

There are three possibilities:

(1)  The loan will appear on your credit report soon.

(2)  The loan will not appear until later, but will appear sometime before you graduate.

(3)  The loan will appear after you leave school.

I do not know of any good way to predict which of the three it will be.  Do you know how to pull your credit reports?  There are free ways to do that on a monthly basis.

When the loan appears on your credit report, it will affect your average age of accounts.  I don't think it should cause your score to take a big dive, since if anything you are adding to your credit mix.  If it causes your AAoA to go from > 1 to < 1 then you will possibly take a temporary hit (until you cross back over 1.0).

Do you have $520 you could use to open a savings account?  If #2 or #3 end up being the case, there's a technique people know on this forum of boosting your credit score by adding what is called a Share Secure loan to your profile.  The technique will stop helping you once your student loan appears, but in the meantime it will give you a big help, and by the time #2 or #3 occur you would have already gotten your two additional cards.  Bear in mind that #1 could happen, however, which would prevent it from helping you soon enough.  If you get interested in reading more about that technique, you can take a look at the first two posts in this thread:

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Secu...

If your loan does appear prior to graduation, then I believe the lender marks it with a metadata tag readable by FICO that it is in deferment.  If any of the veterans know what effect that has on the score I'd be very interested in hearing.  I am pretty sure it doesn't cause FICO to disregard the loan in terms of AAoA, but I suppose it might in terms of installment utilization (which would be good for the OP).

[Anonymous]

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@Anonymous wrote:

There are three possibilities:

(1)  The loan will appear on your credit report soon.

(2)  The loan will not appear until later, but will appear sometime before you graduate.

(3)  The loan will appear after you leave school.

I do not know of any good way to predict which of the three it will be.  Do you know how to pull your credit reports?  There are free ways to do that on a monthly basis.

When the loan appears on your credit report, it will affect your average age of accounts.  I don't think it should cause your score to take a big dive, since if anything you are adding to your credit mix.  If it causes your AAoA to go from > 1 to < 1 then you will possibly take a temporary hit (until you cross back over 1.0).

Do you have $520 you could use to open a savings account?  If #2 or #3 end up being the case, there's a technique people know on this forum of boosting your credit score by adding what is called a Share Secure loan to your profile.  The technique will stop helping you once your student loan appears, but in the meantime it will give you a big help, and by the time #2 or #3 occur you would have already gotten your two additional cards.  Bear in mind that #1 could happen, however, which would prevent it from helping you soon enough.  If you get interested in reading more about that technique, you can take a look at the first two posts in this thread:

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Secure-technique/m-p/4506756

If your loan does appear prior to graduation, then I believe the lender marks it with a metadata tag readable by FICO that it is in deferment.  If any of the veterans know what effect that has on the score I'd be very interested in hearing.  I am pretty sure it doesn't cause FICO to disregard the loan in terms of AAoA, but I suppose it might in terms of installment utilization (which would be good for the OP).

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Thanks for the reply. I checked Credit Karma today and it showed up on my Equifax Report. It brought my CK score down by 13 points. However, it didn't show up on my Transunion score.

[Anonymous]

Since you are using Credit Karma, you should be able to see a Date Reported for the loan.  (On Karma it might be called Last Reported.) 

What is that account's date on the EQ report?

If the date reported for EQ is very recent (e.g. in the last 10 days) then it is possible that the account was also reported to TU around the same time and it will be showing up soon on your TU report.

You might want to sign up for a free monthly Experian report too.  That way you will be able to see if and when the loan appears on Experian.

Do you have access to any free FICO scores?  I am a big booster of Credit Karma, but naturally I think it is helpful to also have access to your FICO scores as well.  There are a number of ways to get those for free.

[Anonymous]

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@Anonymous wrote:

Since you are using Credit Karma, you should be able to see a Date Reported for the loan.  (On Karma it might be called Last Reported.) 

What is that account's date on the EQ report?

If the date reported for EQ is very recent (e.g. in the last 10 days) then it is possible that the account was also reported to TU around the same time and it will be showing up soon on your TU report.

You might want to sign up for a free monthly Experian report too.  That way you will be able to see if and when the loan appears on Experian.

Do you have access to any free FICO scores?  I am a big booster of Credit Karma, but naturally I think it is helpful to also have access to your FICO scores as well.  There are a number of ways to get those for free.

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Yeah, it showed up on my transunion a couple of days ago. I tried to use discover scorecard, but it said that they couldn't generate a score, which is understandable because I only have like 4 months of credit history.

[Anonymous]

After you are getting FICO scores (in 2-3 months from now) we can suggest a technqiue that might give you a lot of extra points.  Can't promise it will... but it might.  It's called the Share Secure Loan technique.

The technique typically does not work for people who already have installment loans, but there are two reasons it might in your case.

(1)  Your installment loans are student loans.  There's been some recent evidence that has suggested the technique might work because FICO might score SLs very differently than other kinds of installment loans.  We don't know right now, but that's possible.

(2)  Your student loans are in deferment.  That's yet another reason that the technique might work for you.

Should you want to read about it, you can do so here.  You only need to read the first few posts:

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Secu...

If you do become interested, I'd ask you to do me a favor and wait until AFTER you have FICO scores at all three bureaus.  That way we will be able to tell how much of a score BOOST you get from implementing the technique.  You already have a credit card reporting at all three bureaus, right?  That's the only other thing we'd want you to have.

Have you signed up yet to get your free monthly Experian credit report?  You will want a method of pulling your credit reports at all three bureaus.  Right now you can get TU and EQ from Karma, but you will also want EX.

[Anonymous]

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@Anonymous wrote:

After you are getting FICO scores (in 2-3 months from now) we can suggest a technqiue that might give you a lot of extra points.  Can't promise it will... but it might.  It's called the Share Secure Loan technique.

The technique typically does not work for people who already have installment loans, but there are two reasons it might in your case.

(1)  Your installment loans are student loans.  There's been some recent evidence that has suggested the technique might work because FICO might score SLs very differently than other kinds of installment loans.  We don't know right now, but that's possible.

(2)  Your student loans are in deferment.  That's yet another reason that the technique might work for you.

Should you want to read about it, you can do so here.  You only need to read the first few posts:

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Adding-an-installment-loan-the-Share-Secure-technique/m-p/4506756

If you do become interested, I'd ask you to do me a favor and wait until AFTER you have FICO scores at all three bureaus.  That way we will be able to tell how much of a score BOOST you get from implementing the technique.  You already have a credit card reporting at all three bureaus, right?  That's the only other thing we'd want you to have.

Have you signed up yet to get your free monthly Experian credit report?  You will want a method of pulling your credit reports at all three bureaus.  Right now you can get TU and EQ from Karma, but you will also want EX.

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Yeah, I don't really want to take out an unnecassary loan right now. I'll just let my current accounts age, and apply for other cards in a few more months.