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Large student loan balances = doomed?

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skigirl916
Established Contributor

Large student loan balances = doomed?

One of the things I frequently see as being a negative on my credit report is the size of my debt.

 

My credit card utilization is under 20% at all times, even prior to paying before the statement is cut.  It averages around 7-10% when reported and is less than $2500 total.

 

My student loans, however, are LARGE and numerous given that they report as individual loans per semester (one private, one federal, for every semester - including grad school).  They make up a small mortgage (about $150K).  The payments are about 6.7% of my gross income.

 

My credit score seems to have remained in the mid-600s for years.  No matter what I do, it hovers there.

 

It's going to take me FOREVER to pay my student loans down/off to lower the balances and number of loans I have.  Am I doomed to have a crappy score until that happens?? Smiley Sad

Message 1 of 6
5 REPLIES 5
pizzadude
Credit Mentor

Re: Large student loan balances = doomed?

 

Where are you obtaining your scores, and do you know for certain they're FICO scores?

 

Also do you have any negative / derogatory information on your reports?

March2010 FICO® ~ 695 TU, 653 EQ, 697 EX
Message 2 of 6
jamie123
Valued Contributor

Re: Large student loan balances = doomed?


@skigirl916 wrote:

One of the things I frequently see as being a negative on my credit report is the size of my debt.

 

My credit card utilization is under 20% at all times, even prior to paying before the statement is cut.  It averages around 7-10% when reported and is less than $2500 total.

 

My student loans, however, are LARGE and numerous given that they report as individual loans per semester (one private, one federal, for every semester - including grad school).  They make up a small mortgage (about $150K).  The payments are about 6.7% of my gross income.

 

My credit score seems to have remained in the mid-600s for years.  No matter what I do, it hovers there.

 

It's going to take me FOREVER to pay my student loans down/off to lower the balances and number of loans I have.  Am I doomed to have a crappy score until that happens?? Smiley Sad


The dollar amounts don't matter in FICO score calculations at all. FICO works only with percentages so a four year $500 loan with $50 paid off is the same as a four year $50,000 loan with $5000 paid off. FICO sees both those scenarios as a four year loan with a remaining balance of 90%. I know that sounds crazy but that is actually how FICO works.

 

Your FICO score tells lenders how likely you are to repay your debts. FICO doesn't tell the lenders if you can actually afford the new loan or new credit that you just applied for. It is the LENDERS that work with dollar amounts and decide if you can afford the new loan or new credit. FICO tells them if you are a good risk or not.

 

We don't know much about installment loans but we do know that once you pay your last installment loan off your score will actually drop.

 

You bring up an interesting point that I was discussing with another MyFICO user the other day. He was wondering if his scores were being held down because two of his student loans had higher balances than the starting loan balance. (Interest accruals?) Do you have any loans with higher balances than their original starting balances?

 

The number of loans and dollar amounts of the loans shouldn't matter in FICO scoring but the % remaining balance does matter. Do you have any loans where the remaining balance is greater than 100% of the starting balance?

 

Do you have any baddies on your reports? 30-day lates? Charge-offs? Judgements?

 

How many credit cards do you have? How old are they?

 

Do you have an auto loan or mortgage?

 

Sorry about asking all these questions but the more information I have the more accurate my advice can be.


Starting Score: EQ 653 6/21/12
Current Score: EQ 817 3/10/20 - EX 820 3/13/20 - TU 825 3/03/20
Message 3 of 6
DrMac210
Regular Contributor

Re: Large student loan balances = doomed?


@skigirl916 wrote:

One of the things I frequently see as being a negative on my credit report is the size of my debt.

 

My credit card utilization is under 20% at all times, even prior to paying before the statement is cut.  It averages around 7-10% when reported and is less than $2500 total.

 

My student loans, however, are LARGE and numerous given that they report as individual loans per semester (one private, one federal, for every semester - including grad school).  They make up a small mortgage (about $150K).  The payments are about 6.7% of my gross income.

 

My credit score seems to have remained in the mid-600s for years.  No matter what I do, it hovers there.

 

It's going to take me FOREVER to pay my student loans down/off to lower the balances and number of loans I have.  Am I doomed to have a crappy score until that happens?? Smiley Sad


I will venture to guess that there is some other significant baddie(s) on your credit report that is keeping your scores down in the 600's.

 

I know this because I have nearly DOUBLE the SL balance that you have, yet my scores are all mid-700's (one of the comments I always get is "loan balance too large in proportion to loan amount"..... or something similar)

 

Any lates on the student loans?  I know had 90, 120, and 150 day lates reporting on my loans, and since they were reporting separately, it ended up being 33 different 90+ day lates reporting.  When those felll off I gained around 30-40 points IIRC.


Starting Score: EQ 641, TU ???, EX ??? (myfico 6/7/13)
Current Score: EQ 760, TU 740, EX 750 (myfico July 2015)
Goal Score: 800 across the board


Take the myFICO Fitness Challenge
Message 4 of 6
taxi818
Super Contributor

Re: Large student loan balances = doomed?


@DrMac210 wrote:

@skigirl916 wrote:

One of the things I frequently see as being a negative on my credit report is the size of my debt.

 

My credit card utilization is under 20% at all times, even prior to paying before the statement is cut.  It averages around 7-10% when reported and is less than $2500 total.

 

My student loans, however, are LARGE and numerous given that they report as individual loans per semester (one private, one federal, for every semester - including grad school).  They make up a small mortgage (about $150K).  The payments are about 6.7% of my gross income.

 

My credit score seems to have remained in the mid-600s for years.  No matter what I do, it hovers there.

 

It's going to take me FOREVER to pay my student loans down/off to lower the balances and number of loans I have.  Am I doomed to have a crappy score until that happens?? Smiley Sad


I will venture to guess that there is some other significant baddie(s) on your credit report that is keeping your scores down in the 600's.

 

I know this because I have nearly DOUBLE the SL balance that you have, yet my scores are all mid-700's (one of the comments I always get is "loan balance too large in proportion to loan amount"..... or something similar)

 

Any lates on the student loans?  I know had 90, 120, and 150 day lates reporting on my loans, and since they were reporting separately, it ended up being 33 different 90+ day lates reporting.  When those felll off I gained around 30-40 points IIRC.


+1 i agree completly. the money amounts does not matter at all. and how many loans also does not matter. it all about percentages. same as in utilization on credit. cards. whether you have 50k in limits or 5k. they will score you based on the percentage you use. good reply to op.

Message 5 of 6
kjel
Established Contributor

Re: Large student loan balances = doomed?


@skigirl916 wrote:

One of the things I frequently see as being a negative on my credit report is the size of my debt.

 

My credit card utilization is under 20% at all times, even prior to paying before the statement is cut.  It averages around 7-10% when reported and is less than $2500 total.

 

My student loans, however, are LARGE and numerous given that they report as individual loans per semester (one private, one federal, for every semester - including grad school).  They make up a small mortgage (about $150K).  The payments are about 6.7% of my gross income.

 

My credit score seems to have remained in the mid-600s for years.  No matter what I do, it hovers there.

 

It's going to take me FOREVER to pay my student loans down/off to lower the balances and number of loans I have.  Am I doomed to have a crappy score until that happens?? Smiley Sad


I have $110K in student loans but mine are consolidated now into a subsidized and unsubsidized loan for my sanity. With so many lines, something is bound to happen and when you are late on one line, your late on all the lines if they happen to be with the same servicer. I defaulted but was successful in rehabbing my loans. I had other things like medical collections, a judgment, and a couple of 30 day lates on my car note when I was unemployed as well as maxxed out credit cards with small credit limits.

 

It's taken 2 years, but now I'm in the upper 600s and crossed the 700 line with one score. I got the judment removed, all but one collection deleted, have paid 24 months of on time payments, steadily increased my credit limits, and consistently kept my credit card balances below 9%.

 

If you share what else is on your report, the forum might be able to help you a bit more.

Current Score: TU: 674 | EQ: 722 | EX: 717 | Last Inq. 2/16/15...Locked Up in The Garden
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