@Anonymous wrote:
You write:
I have two student loans of about $5,000 each (but they are both from the same provider, so I think it just counts as one). I have yet to start making payments on it, but I will need to start soon.
So do you recommend Credit Karma for EQ and TU and then myFico for just EX? Or do you recommend Credit Karma on top of the 3B report from myFico (which is what I currently have)?
As far as your student loans go, be sure to set up some failsafe methods so that there is no way you could ever miss a payment.
Once you do start making payments, you should also contact the loan servicer and explore your options for paying down the principal on the loan. (I.e. making an early lump sum payment on each loan -- for example, bringing your loan balance down from $10000 to $7000) No need to do this of course if you can see that your budget is such that you will not be able to make such an additional early big payment. If you can, however, you will get some scoring benefit by bringing your installment debt down from $10000 to under $6899. (That means under 69% of the original amount owed.) I can't remember whether the breakpoint for scoring benefit is 79% or 69%.
If you can make an early payment, talk to the servicer and find out what that would mean. Ideally you want to hear that a big early payment will do two things.
(1) Be applied to the principal
(2) Extend the due date of your next payment by many months in the future.
Ideally you should want to pay down the amount owed on these student loans (ideally to < 8.9%) but still keep the student loan accounts as "open" accounts for many years.
As far as tools for monitoring your credit reports, I recommend Credit Karma because it is free. It can't hurt to have one more option in your toolkit for pulling reports if that option costs you nothing. A friend of mine here on the forum recently asked me what my own strategy is for tracking my credit. Below (in green) is what I told him. There is no right answer and many people have different strategies.
I use Credit Karma plus Credit.com. This gives me free reports up to once a week on TU and EQ. Credit.com is less detailed (not a full blown report) but it does give me a summary of my Experian data, which is enough for me to figure out if my EX is saying anything significantly different from my TU/EQ. This approach also gives me a unified credit model (Vantage Score 3.0, range 300-850) across all three bureaus which is also enough to tell me if anything strange is happening to my reports or scores. Not a good idea to assume a particular FICO score is the same as your Vantage, but comparing your Vantage across all three bureas is very helpful. It's also very helpful to see whether your score over time at a particular bureau is gradually going up -- that works for any valid model (and Vantage is a very decent model).
Karma plus Credit.com is cost free. Once a year I pull a full blown Experian report from annualCreditReport.com (for free).
To that I have a number of free FICO scores which I get from my credit cards. I get monthly free FICO 8 Classic scores from EX (Chase and Amex) and TU (Bank of America). I get a FICO 8 Bankcard Enhanced score drawn on EQ data from my Citi cards.
Once a year I signup for the myFICO 3B monitoring product. I get maybe three dozen FICO scores when I do that. That costs me $30. About three weeks after I get all those scores, and after I get a clean bill of health from their ID theft service, I cancel my subscription. I do this maybe once every 12-15 months.
That's just my approach. A lot of people here on the Forum love Credit Check Total.
Thank you, This was very helpful!
@Revelate wrote:
In your case the reason codes are clear:
1) Address the revolving utilization (for a lot of reasons) first and foremost and you'll likely get a darned good bump there. 3000/3000 sucks on 2 fronts as individual card utilization is counted too, not just aggregate. Also the interest charges on that if you're carrying a balance are not financially smart, ideally pay it down to a couple of bucks.
2) Once that's done, you can see about playing reindeer games with your installment loans as CGD suggested, but that's a lot less of a score boost typically and usually isn't the straight financial win that paying down revolving debt is.
3) Time passing, which is everybody's friend if they don't miss a payment.
You should've gotten your base reports when you signed up for the myFICO service; go look at them and see explicitly what's there in terms of number of tradelines and what not. Each tradeline is a seperate scoring element, and typically SL's aren't rolled up into one... it's not uncommon for students to get a new SL for every single semester (or quarter) on their credit reports and that only changes if they consolidate in the future. Like CGD I also use CK and credit.com though I do have the MF monitoring still.
Thank you. Very helpful as well!
@Anonymous wrote:
You've already gotten the best advice available anywhere, so the only thing I'll add is congrats on getting through school with only $10K in loans!
Yeah haha I lucked out! I really didn't understand how bad debt could be until recently, and now I am glad I didn't go crazy with loans while in school.
