topic Re: PSLF - Student Loan Effect on Scores in Understanding FICO® Scoring

PSLF - Student Loan Effect on Scores

md_rebuild — Thu, 06 Apr 2023 14:10:14 GMT

So today I found out that not only did I qualify for the Public Service Loan Forgiveness program, but that for each loan (I had 2), I had made more than the 120 required payments (144 to be exact - for each loan) and that once Dept of Education signed off on everything (typically 30 days), I would be getting a refund of the 48 extra payments (I have no idea how much, payments varied over the years, but I'm guessing a refund anywhere from $5K to 9K). So, obviously good news.

My question for this forum, is does anyone have any insight on what is this going to do to my scores? I know there's no way to predict and everyone's profile is different, but wanted to get some advice.

My profile is dirty (BK7 in 2019) but I have quickly rebounded, have 8CC with a total CL of right at $90K (utilization is about 20%, that will be down to less than 10% in the next 4 months). Scores are: EQ - 687; TU - 681; EX - 674. I went on an app spree this spring (4 cards in 4 months) but I'm in the garden until 10/24, when I should be able to get in with Amex. Other than my student loans and CC, I have a car loan through NFCU. I do have a few 30, 60, 90 days late that pre-dated my BK7, but those are all slated to fall off this year. Since my BK7 I have had no negatives.

I wasn't sure if the student loans falling off is going to affect my credit mix and if there's anything I can do in the interim to negate the impact. Any suggestions are greatly appreciated. While I worry about the affect on my scores, being approx $50K less in debt is definitely more important than a 10-20 point hit to my scores.

Re: PSLF - Student Loan Effect on Scores

WildestDreams — Thu, 06 Apr 2023 14:19:25 GMT

@md_rebuild wrote:
So today I found out that not only did I qualify for the Public Service Loan Forgiveness program, but that for each loan (I had 2), I had made more than the 120 required payments (144 to be exact - for each loan) and that once Dept of Education signed off on everything (typically 30 days), I would be getting a refund of the 48 extra payments (I have no idea how much, payments varied over the years, but I'm guessing a refund anywhere from $5K to 9K). So, obviously good news.

My question for this forum, is does anyone have any insight on what is this going to do to my scores? I know there's no way to predict and everyone's profile is different, but wanted to get some advice.

My profile is dirty (BK7 in 2019) but I have quickly rebounded, have 8CC with a total CL of right at $90K (utilization is about 20%, that will be down to less than 10% in the next 4 months). Scores are: EQ - 687; TU - 681; EX - 674. I went on an app spree this spring (4 cards in 4 months) but I'm in the garden until 10/24, when I should be able to get in with Amex. Other than my student loans and CC, I have a car loan through NFCU. I do have a few 30, 60, 90 days late that pre-dated my BK7, but those are all slated to fall off this year. Since my BK7 I have had no negatives.

I wasn't sure if the student loans falling off is going to affect my credit mix and if there's anything I can do in the interim to negate the impact. Any suggestions are greatly appreciated. While I worry about the affect on my scores, being approx $50K less in debt is definitely more important than a 10-20 point hit to my scores.

Congrats!! on the PSLF! and refund!!!!! I have zero insight on the score effect but should be in a simialr position in about 14 months with a chunk of my loans being forgiven and also having a dirty file (Chapter 7) so I'm interested to know how this effects you, keep us posted and YAY!

Re: PSLF - Student Loan Effect on Scores

SouthJamaica — Thu, 06 Apr 2023 14:32:32 GMT

@md_rebuild wrote:
So today I found out that not only did I qualify for the Public Service Loan Forgiveness program, but that for each loan (I had 2), I had made more than the 120 required payments (144 to be exact - for each loan) and that once Dept of Education signed off on everything (typically 30 days), I would be getting a refund of the 48 extra payments (I have no idea how much, payments varied over the years, but I'm guessing a refund anywhere from $5K to 9K). So, obviously good news.

My question for this forum, is does anyone have any insight on what is this going to do to my scores? I know there's no way to predict and everyone's profile is different, but wanted to get some advice.

My profile is dirty (BK7 in 2019) but I have quickly rebounded, have 8CC with a total CL of right at $90K (utilization is about 20%, that will be down to less than 10% in the next 4 months). Scores are: EQ - 687; TU - 681; EX - 674. I went on an app spree this spring (4 cards in 4 months) but I'm in the garden until 10/24, when I should be able to get in with Amex. Other than my student loans and CC, I have a car loan through NFCU. I do have a few 30, 60, 90 days late that pre-dated my BK7, but those are all slated to fall off this year. Since my BK7 I have had no negatives.

I wasn't sure if the student loans falling off is going to affect my credit mix and if there's anything I can do in the interim to negate the impact. Any suggestions are greatly appreciated. While I worry about the affect on my scores, being approx $50K less in debt is definitely more important than a 10-20 point hit to my scores.

1. Congratulations!!! Great news.

2. Your fear of a hit to your scores is unfounded; most likely your scores will be significantly better once the dust settles.

3. The loans won't 'fall off'; they will continue to appear in your reports as paid off loans. So no, it will not affect your credit mix.

4. You haven't given us enough information to assess the impact on your scores, or to advise you on how to best utilize this event to help your scores; we need to know:

- original loan amount and current balance of the auto loan with Navy (hint: it's good news that your loan is with Navy) and

- original loan amounts of the student loans and their balances before the forgiveness

Re: PSLF - Student Loan Effect on Scores

FireMedic1 — Thu, 06 Apr 2023 18:32:09 GMT

@md_rebuild wrote:
So today I found out that not only did I qualify for the Public Service Loan Forgiveness program, but that for each loan (I had 2), I had made more than the 120 required payments (144 to be exact - for each loan) and that once Dept of Education signed off on everything (typically 30 days), I would be getting a refund of the 48 extra payments (I have no idea how much, payments varied over the years, but I'm guessing a refund anywhere from $5K to 9K). So, obviously good news.

My question for this forum, is does anyone have any insight on what is this going to do to my scores? I know there's no way to predict and everyone's profile is different, but wanted to get some advice.

My profile is dirty (BK7 in 2019) but I have quickly rebounded, have 8CC with a total CL of right at $90K (utilization is about 20%, that will be down to less than 10% in the next 4 months). Scores are: EQ - 687; TU - 681; EX - 674. I went on an app spree this spring (4 cards in 4 months) but I'm in the garden until 10/24, when I should be able to get in with Amex. Other than my student loans and CC, I have a car loan through NFCU. I do have a few 30, 60, 90 days late that pre-dated my BK7, but those are all slated to fall off this year. Since my BK7 I have had no negatives.

I wasn't sure if the student loans falling off is going to affect my credit mix and if there's anything I can do in the interim to negate the impact. Any suggestions are greatly appreciated. While I worry about the affect on my scores, being approx $50K less in debt is definitely more important than a 10-20 point hit to my scores.

It will come down to loan util %'s. Yes. Balances will change. Your auto loan will be used as your loan util in the credit mix as if you had no SL since they will be $0 balance. The rest of your file will act as any of us who claimed BK and had to rebuild from stratch.

Re: PSLF - Student Loan Effect on Scores

SouthJamaica — Thu, 06 Apr 2023 19:19:16 GMT

@FireMedic1 wrote:
@md_rebuild wrote:
So today I found out that not only did I qualify for the Public Service Loan Forgiveness program, but that for each loan (I had 2), I had made more than the 120 required payments (144 to be exact - for each loan) and that once Dept of Education signed off on everything (typically 30 days), I would be getting a refund of the 48 extra payments (I have no idea how much, payments varied over the years, but I'm guessing a refund anywhere from $5K to 9K). So, obviously good news.

My question for this forum, is does anyone have any insight on what is this going to do to my scores? I know there's no way to predict and everyone's profile is different, but wanted to get some advice.

My profile is dirty (BK7 in 2019) but I have quickly rebounded, have 8CC with a total CL of right at $90K (utilization is about 20%, that will be down to less than 10% in the next 4 months). Scores are: EQ - 687; TU - 681; EX - 674. I went on an app spree this spring (4 cards in 4 months) but I'm in the garden until 10/24, when I should be able to get in with Amex. Other than my student loans and CC, I have a car loan through NFCU. I do have a few 30, 60, 90 days late that pre-dated my BK7, but those are all slated to fall off this year. Since my BK7 I have had no negatives.

I wasn't sure if the student loans falling off is going to affect my credit mix and if there's anything I can do in the interim to negate the impact. Any suggestions are greatly appreciated. While I worry about the affect on my scores, being approx $50K less in debt is definitely more important than a 10-20 point hit to my scores.
It will come down to loan util %'s. Yes. Balances will change. Your auto loan will be used as your loan util in the credit mix as if you had no SL since they will be $0 balance. The rest of your file will act as any of us who claimed BK and had to rebuild from stratch.

Closed loans still count toward "credit mix".

Re: PSLF - Student Loan Effect on Scores

FireMedic1 — Thu, 06 Apr 2023 20:53:41 GMT

@SouthJamaica wrote:
@FireMedic1 wrote:
@md_rebuild wrote:
So today I found out that not only did I qualify for the Public Service Loan Forgiveness program, but that for each loan (I had 2), I had made more than the 120 required payments (144 to be exact - for each loan) and that once Dept of Education signed off on everything (typically 30 days), I would be getting a refund of the 48 extra payments (I have no idea how much, payments varied over the years, but I'm guessing a refund anywhere from $5K to 9K). So, obviously good news.

My question for this forum, is does anyone have any insight on what is this going to do to my scores? I know there's no way to predict and everyone's profile is different, but wanted to get some advice.

My profile is dirty (BK7 in 2019) but I have quickly rebounded, have 8CC with a total CL of right at $90K (utilization is about 20%, that will be down to less than 10% in the next 4 months). Scores are: EQ - 687; TU - 681; EX - 674. I went on an app spree this spring (4 cards in 4 months) but I'm in the garden until 10/24, when I should be able to get in with Amex. Other than my student loans and CC, I have a car loan through NFCU. I do have a few 30, 60, 90 days late that pre-dated my BK7, but those are all slated to fall off this year. Since my BK7 I have had no negatives.

I wasn't sure if the student loans falling off is going to affect my credit mix and if there's anything I can do in the interim to negate the impact. Any suggestions are greatly appreciated. While I worry about the affect on my scores, being approx $50K less in debt is definitely more important than a 10-20 point hit to my scores.
It will come down to loan util %'s. Yes. Balances will change. Your auto loan will be used as your loan util in the credit mix as if you had no SL since they will be $0 balance. The rest of your file will act as any of us who claimed BK and had to rebuild from stratch.
Closed loans still count toward "credit mix".

I know that. I meant really doesnt matter what kind of loan. Student, Auto, ect. It was more on the util side of the loan mix side. The aggregate % will change.

Re: PSLF - Student Loan Effect on Scores

donkort — Fri, 07 Apr 2023 11:43:28 GMT

As for me, with a "clean file," based on past behavior, I will be seeing a small increase, but less of an increase than if I kept a balance.

I was PSLF forgiven 2/15/23.

Congratulations on your forgiveness!

Re: PSLF - Student Loan Effect on Scores

md_rebuild — Fri, 07 Apr 2023 14:43:32 GMT

Thanks. That's what I was unclear on, was the credit mix. I thought it "fell off". So now, since I don't have student loans (or won't in the very near future), I'll need to ensure that I have something in my "mix" for when I pay off my car loan (which may be next year). At that point, I'd only have my credit cards.

Re: PSLF - Student Loan Effect on Scores

Thomas_Thumb — Fri, 07 Apr 2023 15:08:04 GMT

Closed loans stay on file and count toward credit mix as long as they are on file.

Fico 8/9 scores often drop when the last open loan closes. This is not due to a loss in mix, it is due to lack of recent installment activity - kinda like the no recent revolving activity penalty. The revolving accounts are still part of mix even if they report zero balance.

Re: PSLF - Student Loan Effect on Scores

SouthJamaica — Fri, 07 Apr 2023 20:00:42 GMT

@md_rebuild wrote:
Thanks. That's what I was unclear on, was the credit mix. I thought it "fell off". So now, since I don't have student loans (or won't in the very near future), I'll need to ensure that I have something in my "mix" for when I pay off my car loan (which may be next year). At that point, I'd only have my credit cards.

No, your "credit mix" is unaffected, since it includes closed as well as open accounts.

What will be at play when they're all paid off is something entirely different... a no-open-loan penalty.

Meanwhile, as I told you earlier in this thread:

You haven't given us enough information to assess the impact on your scores, or to advise you on how to best utilize this event to help your scores; we need to know:

- original loan amount and current balance of the auto loan with Navy (hint: it's good news that your loan is with Navy) and

- original loan amounts of the student loans and their balances before the forgiveness

Re: PSLF - Student Loan Effect on Scores

Shooting-For-800 — Sat, 08 Apr 2023 04:10:18 GMT

My wife went from 815 to 825 after paying off over $200k through PSFL.

I always said that student loans did not really harm scores unless one had baddies.

GL!

Re: PSLF - Student Loan Effect on Scores

md_rebuild — Mon, 10 Apr 2023 00:15:18 GMT

@SouthJamaica wrote:
@md_rebuild wrote:
Thanks. That's what I was unclear on, was the credit mix. I thought it "fell off". So now, since I don't have student loans (or won't in the very near future), I'll need to ensure that I have something in my "mix" for when I pay off my car loan (which may be next year). At that point, I'd only have my credit cards.
No, your "credit mix" is unaffected, since it includes closed as well as open accounts.

What will be at play when they're all paid off is something entirely different... a no-open-loan penalty.

Meanwhile, as I told you earlier in this thread:

You haven't given us enough information to assess the impact on your scores, or to advise you on how to best utilize this event to help your scores; we need to know:
- original loan amount and current balance of the auto loan with Navy (hint: it's good news that your loan is with Navy) and
- original loan amounts of the student loans and their balances before the forgiveness

My original car loan amount was $42K, it's now at $29.5K. Have about 4 years left but will probably use some extra funds to pay it off in 2.

The last balances on my SL were approximately $25K each (I had 2). So that will be approximately $50K that I'm no longer responsible for!

I'm hoping that when my 30, 60, and 90 day lates fall off in late Fall, that I'll shoot up to 700 on my scores. That and get my util down to less than 10% (I've had some extra expenses but will be able to pay it down in Sept/Oct). I have all I need, and with my recent app spree, I just want to garden until next fall when I'll hopefully get in with Amex, and after that I probably will garden some more (and try and push up my limits). I'm not chasing CLs, and having $65K with NFCU (3 cards) is more than adequate, along with a few others that I'll keep sock-drawered.

I would like to get a good travel rewards card (Delta Amex Gold) or Marriott Bonvoy but those can wait. I'm patient!

Re: PSLF - Student Loan Effect on Scores

SouthJamaica — Mon, 10 Apr 2023 12:03:27 GMT

@md_rebuild wrote:
@SouthJamaica wrote:
@md_rebuild wrote:
Thanks. That's what I was unclear on, was the credit mix. I thought it "fell off". So now, since I don't have student loans (or won't in the very near future), I'll need to ensure that I have something in my "mix" for when I pay off my car loan (which may be next year). At that point, I'd only have my credit cards.
No, your "credit mix" is unaffected, since it includes closed as well as open accounts.

What will be at play when they're all paid off is something entirely different... a no-open-loan penalty.

Meanwhile, as I told you earlier in this thread:

You haven't given us enough information to assess the impact on your scores, or to advise you on how to best utilize this event to help your scores; we need to know:
- original loan amount and current balance of the auto loan with Navy (hint: it's good news that your loan is with Navy) and
- original loan amounts of the student loans and their balances before the forgiveness
My original car loan amount was $42K, it's now at $29.5K. Have about 4 years left but will probably use some extra funds to pay it off in 2.
The last balances on my SL were approximately $25K each (I had 2). So that will be approximately $50K that I'm no longer responsible for!

......

OK Thanks. I still need to know the original loan amounts of the student loans, in order to answer your question.

Re: PSLF - Student Loan Effect on Scores

donkort — Mon, 10 Apr 2023 13:18:04 GMT

Empirical data:

TransUnion just reported my student loan forgiveness. It is now $0 balance; whereas it was $65,000 previously.

My FICO 8 score rose 20 points, from a 793 to an 813. I'm 850 within both 10 and 10T.

Re: PSLF - Student Loan Effect on Scores

JM761 — Fri, 14 Apr 2023 21:26:15 GMT

Chiming in since I'm in this situation and can share my data point.

first off, congrats! I also did PSLF and was forgiven in January (144 payments out of 120 but no refund since I consolidated from FFELPS loans to Direct). No worries, I'll take it!

When my consolidation loan (through MOHELA) was added to my credit report in Nov 2022, my score went UP 12 points (all 3Bs). I'm believe this is because I had no other open loans. At the time my credit was around 700-720. I did not have any other open loans aside from a mortgage. I had one old student loan that was sold to another lender for non-payment and marked "closed" with a balance of $0.

This January, my loans were forgiven and I wondered what would happen to my loans when forgiven on my CR. This week, TU closed my MOHELA loan and balance went to $0. My score took a 6 point hit (730 to 724). Hoping it will bounce back over time. The loan was open for a total of 8 months (but was only on my CR for about 4). Loan hasn't come off EX or EQ yet but I've read that they are slower to close and sometimes it needs to be requested. I"m going to apply for a HELOC or some kind of home repair loan soon so I am trying to figure out if I dispute see if I can push them to close it, knowing my score will take a hit, or if I should leave it open (score will be higher but it looks like I owe 100% of the loan).

Hope this info helps.

Re: PSLF - Student Loan Effect on Scores

JM761 — Fri, 14 Apr 2023 21:28:23 GMT

woohoo! Congrats on the hefty forgiveness!

My scores dipped a few points but I think it's b/c my loans were open a short time and it was my only other loan. Do you still have other loans open (like car, other student loan, etc). Just curious! Congrats on the jump to the 800s!

Re: PSLF - Student Loan Effect on Scores

donkort — Sun, 16 Apr 2023 01:53:56 GMT

Thanks.

Nope. No other loans. Have a pretty good amount of credit cards, though. $100 total balance within a $50K total credit limit.

Re: PSLF - Student Loan Effect on Scores

md_rebuild — Sun, 16 Apr 2023 15:28:23 GMT

Original studen

@SouthJamaica wrote:
@md_rebuild wrote:
@SouthJamaica wrote:
@md_rebuild wrote:
Thanks. That's what I was unclear on, was the credit mix. I thought it "fell off". So now, since I don't have student loans (or won't in the very near future), I'll need to ensure that I have something in my "mix" for when I pay off my car loan (which may be next year). At that point, I'd only have my credit cards.
No, your "credit mix" is unaffected, since it includes closed as well as open accounts.

What will be at play when they're all paid off is something entirely different... a no-open-loan penalty.

Meanwhile, as I told you earlier in this thread:

You haven't given us enough information to assess the impact on your scores, or to advise you on how to best utilize this event to help your scores; we need to know:
- original loan amount and current balance of the auto loan with Navy (hint: it's good news that your loan is with Navy) and
- original loan amounts of the student loans and their balances before the forgiveness
My original car loan amount was $42K, it's now at $29.5K. Have about 4 years left but will probably use some extra funds to pay it off in 2.
The last balances on my SL were approximately $25K each (I had 2). So that will be approximately $50K that I'm no longer responsible for!

......
OK Thanks. I still need to know the original loan amounts of the student loans, in order to answer your question.

Original student loan amount was approximately $60K.

Re: PSLF - Student Loan Effect on Scores

donkort — Fri, 21 Apr 2023 13:35:21 GMT

Update:

The forgiveness is now reflected in all three bureaus. My FICO 8 scores increased 14 points for EQ and EX, and 20 points for TransUnion. They are now: EQ: 796; TU: 813; EX: 813.

The student loan is now marked "closed."

I had $65,000 forgiven.