topic Do what makes sense financially. FICO will eventually rec... in General Credit Topics

Student Loan

Anonymous — Wed, 28 Mar 2007 21:47:24 GMT

I have 3 student Loans - Will my scores benefit from paying 2 of the Loans off?

Do what makes sense financially. FICO will eventually rec...

Anonymous — Wed, 28 Mar 2007 21:51:11 GMT

Do what makes sense financially. FICO will eventually recover even if the answer to your question is "no."

The answer is: hard to say. I've had paying things off and closing them increase my score, decrease my score, and have no effect whatsoever.

I am currently sitting on the 700 threshold and trying to...

Anonymous — Wed, 28 Mar 2007 22:59:19 GMT

I am currently sitting on the 700 threshold and trying to get above that mark. Financially, it is an easy decision. I pay 2 off. I would prefer to leave them alone if they will "hurt" my score. Reading the FICO score sheets, it states balances reflect 30-35% of your overall score. So, I am assuming that paying 2 of these accounts off will help. However, I am not sure if these accounts will then be considered closed, which may hurt. I am looking for the best possible outcome. Thanks for your help.

Financially, it'd make more sense to pay them off if the...

Anonymous — Wed, 28 Mar 2007 23:15:59 GMT

Financially, it'd make more sense to pay them off if the amount of interest you're paying on the loans exceeds the interest rate you could get by putting the $ in a CD.

My student loans are consolidated at 4%; it currently makes more sense for me to keep the bulk of my money in savings rather than paying them off faster.

I could be wrong, but I don't think student loans are a r...

Anonymous — Wed, 28 Mar 2007 23:59:54 GMT

I could be wrong, but I don't think student loans are a revolving charge account, so you wouldn't be "closing" the account in the same manner of speaking as you would be if you closed a credit card account. A credit card account is designed to revolve permanently. A loan usually has a set course it runs in terms of repayments. In other words, the system expects that the loan "account" will ultimately be "closed" (read: paid off) and thus you should not be penalized for paying it off. In fact, from what I understand, it would list as a loan repaid as agreed, which would enhance your credit score.

But as is the case with anything FICO-related, YMMV.