Student Loans

[Anonymous]

My student loan balance is $51k while the high/limit is $45k. Does anyone know why this is? More importantly, does this +105% utilization rate negatively affect my score even though it is a student loan and an installment account?

[Anonymous]

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@Anonymous wrote:

My student loan balance is $51k while the high/limit is $45k. Does anyone know why this is? More importantly, does this +105% utilization rate negatively affect my score even though it is a student loan and an installment account?

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@Anonymous,

Welcome to MYFICO.  To understand how student loans are factored in here is some good info. here for you..http://blog.myfico.com/2015/03/how-student-loans-affect-your-fico-scores/ 

[MarineVietVet]

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@Anonymous wrote:

My student loan balance is $51k while the high/limit is $45k. Does anyone know why this is? More importantly, does this +105% utilization rate negatively affect my score even though it is a student loan and an installment account?

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Hello and welcome to the forums.

Although installment loan utilization is factored in it's such a small part of scoring that it can virtually be ignored compared to revolving credit utilization.

I reached out to an expert source about this and got this response:

I'm kind of curious myself as to why the trade line shows a $51K balance with a high/limit of $45K, which should be reporting as something like credit limit/original amount separately from the high balance. I'm going to assume there's not a separate item for original amount, though this is what the score references in installment util. Maybe the balance is higher than the H/L/ original amount because of accrued interest?

I don't know if, like with revolving, there's a bigger score hit for 105% than 100%. But as you recall correctly IL utill weighs very little in the score. 

So, I can't say it doesn't matter at all that the H/L/original amount is lower than the current balance, but I can say that at it's worst the impact would not nearly what would be for revolving. The poster may want to contact the lender to see why it's reporting this way. But it shouldn't be keeping him/her up at night.   

I hope this answers some of your concerns.

[Anonymous]

My loans report that way too - it's accrued interest from while you were in school and not making payments. Only subsidized student loans will have the same high balance and original limit or loans where you elected to pay interest while in school.

You aren't penalized for the balance being over 100% of the limit, but once you get the loans paid down to 70% of the original limit your score will start to increase - but not much. I ran the simulator on my loans, paying down 30% increases my score by 5 points, and paying them off only increases it 40 points - and my student loan debt is higher than my mortgage to help put it in perspective.

On all my credit pulls, the factors affecting my score are installment accounts balances high relative to limits, and too many installment accounts with balances (I have 48 loans, and half of them are balances around 1k or less)