Could a reduced payment forbearance hurt me?

[JJT]

New here and could use some advice. Does anyone know if doing a reduced payment forbearance (RPF) on student loans could raise a red flag with your credit card companies and trigger adverse action? I'm considering a RPF on my Direct Loans, which would lower my monthly payments for up to a year, but I'm worried because two of my credit cards right now are at almost 90% UTIL, and my overall UTIL is about 80%, which I know is not good. I'm in the process of trying to bring those balances down. I should mention that aside from the high UTIL, my credit report is great (no lates, no baddies, only 1 recent inquiry, etc.) and my FICO scores are in the 710-730 range (probably would be about 800 if not for the high UTIL).

I know that a RPF doesn't affect your credit score. But I'm afraid that if the CC companies saw the RPF on my credit report during their periodic reviews, it would signal to them that I'm having financial trouble (especially given my high UTIL) and trigger AA. If that were to happen, the RPF would end up doing far more harm than good. Is my fear legitimate? Does anyone know how a RPF shows up on your credit report (Does it say "forbearance," or does it just say "pays as agreed"?). I plan to call the student loan servicer (Edfinancial) to find out more about the possible consequences of doing a RPF and exactly how it is reported, but I imagine they'll just give me the standard line of "It doesn't hurt your credit."  Anyone have any thoughts or experience with RPF's?

[Anonymous]

I just checked my credit report and it says "Paid as agreed" and "Current" .... I switched from forbarence over to teh IBR (income based repayment) and it did not show up on my credit report.... i have all green solid bars and havent made a payment in 5 years!

[iDShaDoW]

I don't have a Reduced Payment Forbearance but I am was in forbearance myself (ie. was unable to find work after graduating; applied for forbearance and then found a job thankfully like 2 weeks after).

I just pulled a free Equifax report and all my student loan accounts have a Status of "Paid As Agreed" with no other notes so it would appear that forbearance and the like are fairly common and they don't put any notes out to the credit bureaus (Dept of ED/Sallie Mae at least which are the people that service my loans; if you have loans through someone else it might be different).

I think you'll be fine credit score wise; the only way a Reduced Payment Forbearance would hurt you is if you just pay off the newly reduced minimum on your student loans and don't put the difference towards your higher interest rate credit card debt causing you to accrue more interest over the life of your loans.

I actually applied for Income Based Repayment and since I was unemployed at the time, they said I had to make payments of $0/mo and then I applied for auto-debit or whatever it was so they have been automatically debiting $0/mo and reduced my interest rates by 0.25% which helped me a bit more which you might want to consider doing if you haven't already.

That should get you a bit of breathing space so you can pay down your credit cards ASAP and keep it down below 10% to save money on interest charges, improve your credit score, and then start focusing on paying your student loans off.