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Impact of Late/High Balance Student Loans

At_1254
Established Member

Impact of Late/High Balance Student Loans

Hello, 

 

I'm new to this forum and I was wondering if I could get some advice. I'm trying to improve my mortgage score to get approved for a loan in the next 12 months. I'd like to get to above 700, but I don't think that is likely (so shooting for above 660). 

 

FICO 8 scores are all around 585-590

I only have Experian FICO 2 and it is 611. 

 

Bad:

Collections:

2 Collections from Portfolio Recovery - Paid last month, they said it will be deleted in 30-60 days

1 Paid Verizon collection in Jan - I recently called the company and they said they will delete it -  we will see 

1 Medical Collection from 2016 - I disputed this with a previous CA and the insurance company. Just sent a validation letter to the new company, hopefully, I can have it removed based on inaccurate data/HIPAA (don't recall signing a HIPAA waiver)

1 Collection for apartment repair bill with National Credit Systems - I disputed with the apartment complex because I thought it was egregious, but then it went to collections about a year ago. I called and they said they will delete it after payment, but won't send a letter. I have seen on this forum and others that they do delete, so hopefully, that will happen. I can pay for that at the end of the month. 

 

Charge-Off:

I have one CO from a CC from 2018 for $800 (credit limit is $500) - I can pay that now. I doubt I can a PFD, but according to MyFICO it is should decrease my utilization? I have read that updating to the current date can cause the drop, so perhaps I should ask if they will close out the payment, but not update to the current date?

 

Student Loan:

This is the big one I think. I was 90 days late in early 2019 from a temporary financial situation, but like many other people in this situation, even though it was 1 single payment to Fed Loan, they showed 14 different late payments for each loan. I have since consolidated so all of these loans are closed and the new account has been on time ever since, but the payments have been the minimum and the total balance is actually slightly higher than the original. I sent a GW letter as it couldn't hurt, but obviously very unlikely. 

 

How much do you think the loan balance/percentage is hurting my score?

Am I screwed as far getting to 700 because of these multiple late payments? From what I have read, recovery from a -30 or -60 day could be possible after 3 years (will be 3 years as I'm applying for a mortgage in 2022), but not a 90-day or more as that is the full 7 years in terms of impact. True?

 

Good:

Some positive payment history on SL as above

1 secured Capital One - 2 years old, perfect payment history, $0/$600 credit limit

2 additional credit cards-1-year-old, perfect payment history, both have $0/400 limit

1 Discover card as an AU from 6 years ago, perfect payment history, $100/$1500

1 Credit Builder Loan - 12 months, started in Jun 2020, perfect payment history 

 

Any advice you can provide would be much appreciated. Assuming I can get all of these collections removed and somewhat favorable action for the CC charge-off, what is the prognosis for the next 12 months? Anything specifically I can do to raise the FICO mortgage scores? Thanks!

 

 

 

 

 

10 REPLIES 10
Birdman7
Super Contributor

Re: Impact of Late/High Balance Student Loans


@At_1254 wrote:

Hello, 

 

I'm new to this forum and I was wondering if I could get some advice. I'm trying to improve my mortgage score to get approved for a loan in the next 12 months. I'd like to get to above 700, but I don't think that is likely (so shooting for above 660). 

 

FICO 8 scores are all around 585-590

I only have Experian FICO 2 and it is 611. 

 

Bad:

Collections:

2 Collections from Portfolio Recovery - Paid last month, they said it will be deleted in 30-60 days

1 Paid Verizon collection in Jan - I recently called the company and they said they will delete it -  we will see 

1 Medical Collection from 2016 - I disputed this with a previous CA and the insurance company. Just sent a validation letter to the new company, hopefully, I can have it removed based on inaccurate data/HIPAA (don't recall signing a HIPAA waiver)

1 Collection for apartment repair bill with National Credit Systems - I disputed with the apartment complex because I thought it was egregious, but then it went to collections about a year ago. I called and they said they will delete it after payment, but won't send a letter. I have seen on this forum and others that they do delete, so hopefully, that will happen. I can pay for that at the end of the month. 

 

Charge-Off:

I have one CO from a CC from 2018 for $800 (credit limit is $500) - I can pay that now. I doubt I can a PFD, but according to MyFICO it is should decrease my utilization? I have read that updating to the current date can cause the drop, so perhaps I should ask if they will close out the payment, but not update to the current date?

 

Student Loan:

This is the big one I think. I was 90 days late in early 2019 from a temporary financial situation, but like many other people in this situation, even though it was 1 single payment to Fed Loan, they showed 14 different late payments for each loan. I have since consolidated so all of these loans are closed and the new account has been on time ever since, but the payments have been the minimum and the total balance is actually slightly higher than the original. I sent a GW letter as it couldn't hurt, but obviously very unlikely. 

 

How much do you think the loan balance/percentage is hurting my score?

Am I screwed as far getting to 700 because of these multiple late payments? From what I have read, recovery from a -30 or -60 day could be possible after 3 years (will be 3 years as I'm applying for a mortgage in 2022), but not a 90-day or more as that is the full 7 years in terms of impact. True?

 

Good:

Some positive payment history on SL as above

1 secured Capital One - 2 years old, perfect payment history, $0/$600 credit limit

2 additional credit cards-1-year-old, perfect payment history, both have $0/400 limit

1 Discover card as an AU from 6 years ago, perfect payment history, $100/$1500

1 Credit Builder Loan - 12 months, started in Jun 2020, perfect payment history 

 

Any advice you can provide would be much appreciated. Assuming I can get all of these collections removed and somewhat favorable action for the CC charge-off, what is the prognosis for the next 12 months? Anything specifically I can do to raise the FICO mortgage scores? Thanks!

 

 

 

 

 


@At_1254 get rid of the collections all of them, do what you can with the charge off and implement AZEO. Read the Scoring Primer linked in my signature.

-Scoring wisdom: General Scoring Primer, Payment History, Amount of Debt, Length of History/New Credit, Mix/Disputes/Freezes/Searches, Mortgage Scores/Negative Reason Codes/V.9, Helpful Links,
CassieCard’s Reason Statements Thread,
iv's friendly statement to reason statement concordance,

ccquest’s Workbook to calculate metrics.
Clean/Thick/Mature/No New Revolver - 8,9; Clean/Thick/Mature/No New Account - 5/4/2.
Correct Ag.Util. under 5% all times. (Oldest/avg varies. Estimates above.)
Real world mortgage maxes are: EQ5-818, TU4-839, EX2-844.




(Everything said is JMHO and is not endorsed by FICO or MF. I have no affiliation with either, just a grateful member.)
Message 2 of 11
calyx
Super Contributor

Re: Impact of Late/High Balance Student Loans

Hi @At_1254  - I'm only going to address the SL portion (you'll get lots of good mortgage scoring advice, but honestly, as long as the collections are present, you're going to have major score dings.

 


@At_1254 wrote:

 

How much do you think the loan balance/percentage is hurting my score?

Am I screwed as far getting to 700 because of these multiple late payments? From what I have read, recovery from a -30 or -60 day could be possible after 3 years (will be 3 years as I'm applying for a mortgage in 2022), but not a 90-day or more as that is the full 7 years in terms of impact. True?

 

 

Any advice you can provide would be much appreciated. Assuming I can get all of these collections removed and somewhat favorable action for the CC charge-off, what is the prognosis for the next 12 months? Anything specifically I can do to raise the FICO mortgage scores? Thanks!

 


The 90d lates are just going to be brutal for as long as they're present.   You are correct, servicers are not very friendly when it comes to goodwill deletions.     Federal (I'm assuming these are federal) student loan reporting is dictacted by the HEA, which overrides the FCRA, and most servicers will just tell you that legally, they have to report it.

 

As for the high balance - it has a negligible effect on your scores.  Installment utilization is much less impactful than revolving loan balances.    


Which servicer are you with?  

RIP:

F8 EQ: 809 | EX: 802 | TU: 805 | Accounts: 0/6 3/12 5/24
Happy practitioner of AZE7or8or9or10 | Team Finances > FICO
Message 3 of 11
Doodlebug30
Frequent Contributor

Re: Impact of Late/High Balance Student Loans

@At_1254  So i would def clear up the collections ASAP as those dropping will net you some points for sure. Also, i think you will see good point gains from paying the charge off also. My husband saw quite a good boost when he paid his charge offs. (Plus the mortgage will require it). As far as the student loan lates, I can tell you those will stick with you for the entire 7 years. I was able to get above 700 with the lates still on there around the 5-6 year mark but barely. Experian just dropped my lates and im now at a 750ish but the other two are stuck at 700 & 712 bc my lates havent fallen off those two yet. 

Message 4 of 11
Birdman7
Super Contributor

Re: Impact of Late/High Balance Student Loans

That is correct, installment Balances & Installment Utilization are definitely not very impactful on the mortgage scores typically; however there may be a penalty for being over 100% Installment Utilization. Still less impactful than other things.

Read the mortgage section I recently updated linked in my signature.
-Scoring wisdom: General Scoring Primer, Payment History, Amount of Debt, Length of History/New Credit, Mix/Disputes/Freezes/Searches, Mortgage Scores/Negative Reason Codes/V.9, Helpful Links,
CassieCard’s Reason Statements Thread,
iv's friendly statement to reason statement concordance,

ccquest’s Workbook to calculate metrics.
Clean/Thick/Mature/No New Revolver - 8,9; Clean/Thick/Mature/No New Account - 5/4/2.
Correct Ag.Util. under 5% all times. (Oldest/avg varies. Estimates above.)
Real world mortgage maxes are: EQ5-818, TU4-839, EX2-844.




(Everything said is JMHO and is not endorsed by FICO or MF. I have no affiliation with either, just a grateful member.)
Message 5 of 11
At_1254
Established Member

Re: Impact of Late/High Balance Student Loans

@Birdman7 ,Will do, thank you!

Message 6 of 11
At_1254
Established Member

Re: Impact of Late/High Balance Student Loans


@calyx wrote:

Hi @At_1254  - I'm only going to address the SL portion (you'll get lots of good mortgage scoring advice, but honestly, as long as the collections are present, you're going to have major score dings.

 


@At_1254 wrote:

 

How much do you think the loan balance/percentage is hurting my score?

Am I screwed as far getting to 700 because of these multiple late payments? From what I have read, recovery from a -30 or -60 day could be possible after 3 years (will be 3 years as I'm applying for a mortgage in 2022), but not a 90-day or more as that is the full 7 years in terms of impact. True?

 

 

Any advice you can provide would be much appreciated. Assuming I can get all of these collections removed and somewhat favorable action for the CC charge-off, what is the prognosis for the next 12 months? Anything specifically I can do to raise the FICO mortgage scores? Thanks!

 


The 90d lates are just going to be brutal for as long as they're present.   You are correct, servicers are not very friendly when it comes to goodwill deletions.     Federal (I'm assuming these are federal) student loan reporting is dictacted by the HEA, which overrides the FCRA, and most servicers will just tell you that legally, they have to report it.

 

As for the high balance - it has a negligible effect on your scores.  Installment utilization is much less impactful than revolving loan balances.    


Which servicer are you with?  


Thank you for the information. I'm with Federal Loan Servicing. 

Message 7 of 11
At_1254
Established Member

Re: Impact of Late/High Balance Student Loans


@Doodlebug30 wrote:

@At_1254  So i would def clear up the collections ASAP as those dropping will net you some points for sure. Also, i think you will see good point gains from paying the charge off also. My husband saw quite a good boost when he paid his charge offs. (Plus the mortgage will require it). As far as the student loan lates, I can tell you those will stick with you for the entire 7 years. I was able to get above 700 with the lates still on there around the 5-6 year mark but barely. Experian just dropped my lates and im now at a 750ish but the other two are stuck at 700 & 712 bc my lates havent fallen off those two yet. 


@Doodlebug30 Thank you, hopefully, these collections will be removed after payment/dispute. The information you provided is helpful, thanks again!

Message 8 of 11
CyberChick
Valued Member

Re: Impact of Late/High Balance Student Loans

IF you have federal student loans they should be reporting positive - the government has postponed ALL activity on student loans until  Sept. 2021. I would not worry about them. Even if you don't pay they can't do anything about it, it's part of the COVID relief. No interest, no collections, no nothing... even if you haven't paid in years, everyone is getting a reprieve and it's been that way since the Pandemic started. 

 

Message 9 of 11
At_1254
Established Member

Re: Impact of Late/High Balance Student Loans


@CyberChick wrote:

IF you have federal student loans they should be reporting positive - the government has postponed ALL activity on student loans until  Sept. 2021. I would not worry about them. Even if you don't pay they can't do anything about it, it's part of the COVID relief. No interest, no collections, no nothing... even if you haven't paid in years, everyone is getting a reprieve and it's been that way since the Pandemic started. 

 


@CyberChick This event occurred in late 2018/early 2019. The loans were consolidated and then closed. The new (consolidated) loan was on-time for the rest of 2019 and the first few months of 2020 until the COVID relief kicked in. So it has been roughly 2.3 years since that last late. From what I have read on the forums, it is still significant as it is a 90D (ugh), whereas a 60D would be much less. 

Message 10 of 11
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