Understanding FICO® Scoring

[Paramagic]

I am a full time student in school and as a result am lucky enough to be graced with huge amounts of mounting student loan debt. Jealous? I know you are? Well for the privaledge of a higher education, my credit score is suffering because my student loans are on deferment, and the installment loan ratio is not going down. How am I to get my credit score up without having the money at the current time to pay down my student loans? Shouldn't this be a factor in the FICO? Also, I refinaced my car to a lower rate when my FICO went up and saved a ton of money. The probelm is that although over the life of the car I have paid off over 30% of the original balance, but with the new loan I only only down about 5%. Shouldnt that be taken into consideration?

Stephen

[cheddar]

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Paramagic wrote:

I am a full time student in school and as a result am lucky enough to be graced with huge amounts of mounting student loan debt. Jealous? I know you are? Well for the privaledge of a higher education, my credit score is suffering because my student loans are on deferment, and the installment loan ratio is not going down. How am I to get my credit score up without having the money at the current time to pay down my student loans? Shouldn't this be a factor in the FICO? Also, I refinaced my car to a lower rate when my FICO went up and saved a ton of money. The probelm is that although over the life of the car I have paid off over 30% of the original balance, but with the new loan I only only down about 5%. Shouldnt that be taken into consideration?

Stephen

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What else is on your reports, and what are your FICO scores?

Having high balances on student loans really don't hurt your scores that badly, if at all.  I'd say there must be something else going on.

Message Edited by cheddar on 06-27-2008 01:44 PM

[TheNewWorldMan]

Yes, Cheddar is right...the answer to your stubbornly low FICO scores likely lies elsewhere.

Do you have any derogatory entries on your CR?

How many accounts in good standing other than the SLs do you have?

What are the balances on your credit cards (if any) relative to the credit limits. If your total balances are more than about 50 to 70% of your credit limits, that right there could be the problem. As Cheddar said, FICO scoring is relatively insensitive to installment loan balances, but balances on revolving charge accounts are a different matter entirely...

[Paramagic]

I do have about 80% utilized on a combined total over 2 credit cards. Other than that and 5 old student loans that were in default and a 3 year old judgement, I have nothing. The 5 old loans drop off in about 5 months, so they are real old. I am trying to get the judgement removed. I understand that I am not in the best of shape with my credit but I am defintely on my way. I have not missed a payment in over 6 years. (The judgement was something that should not have been done since I settled with the CC for less about 8 years ago, and then they still came after me. I settled with the CA to get the case thrown out) I am trying to get the CC utlization down but I was just more concerned if the student loans were making it impossible to get above 700 even if I did everything else right.

THanks

Stephen

[TheNewWorldMan]

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Paramagic wrote:

I do have about 80% utilized on a combined total over 2 credit cards. Other than that and 5 old student loans that were in default and a 3 year old judgement, I have nothing

...

I am trying to get the CC utlization down but I was just more concerned if the student loans were making it impossible to get above 700 even if I did everything else right.

THanks

Stephen

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That explains it. The judgment is sitting on your score, as is that high utilization. Paying down those balances will definitely help your score. Getting the judgment off your CR will help, too. But the SLs are not hurting you. Just keep paying like you're supposed to.