Student Loan Interest Capitalization & Credit Score

[Anonymous]

I have a question about student loan interest capitalization and effect on credit score...

In college, my student loan interest accrued and was addded onto the balance of the loan.  So on my credit report, credit limit shows the original loan amount, let's say $5,000.  While the balance shows $6,500, which is the original loan amount, plus interest that capitalized.

My question is, does this affect my credit utilization, thereby lowering my total credit score?

Essentially when there is a negative amortization does it hurt your credit score?

[Tuscani]

Welcome.. Please read the Scoring 101 thread:

http://ficoforums.myfico.com/fico/board/message?board.id=ficoscoring&thread.id=2654

[Anonymous]

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@Anonymous wrote:

I have a question about student loan interest capitalization and effect on credit score...

In college, my student loan interest accrued and was addded onto the balance of the loan. So on my credit report, credit limit shows the original loan amount, let's say $5,000. While the balance shows $6,500, which is the original loan amount, plus interest that capitalized.

My question is, does this affect my credit utilization, thereby lowering my total credit score?

Essentially when there is a negative amortization does it hurt your credit score?

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I say it could be hurting it a bit if you don't have other installment loans. How long have you had this loan to build up 1.5K in interest? These must not be government loans..as they pay the interest while in school,

[Anonymous]

Thanks for the welcome.

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Yep, I have two private loans in the same situation - the interest built up over 2.5 years for one of them and 1.5 years for the other.  They gave the option to pay or defer interest while I was in college, but of course, didn't explain the effects of deferring the interest.

I understand the basics of credit utilization, but I'm not sure if the scoring method considers only revolving credit accounts, or both revolving and non-revolving credit.  The definitions I've read aren't exactly clear on that point.