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Does just having large balances affect your score?

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tschaet
Regular Contributor

Does just having large balances affect your score?

All of my student loans are on time and have no late payment marks on any report.  However, the combined balances are just over $100,000.  They're almost all federal and have been consolidated into one loan.  Does just having a high balance like that make a negative impact on the report due to a rough debt-to-income ratio, or does it only affect your score when they're in collections, with late payments, etc?

$1700$2000
5/2022 Credit Karma Scores:

April 2022 FICO Scores:

May 2022 FICO Scores:
Message 1 of 11
10 REPLIES 10
Shooting-For-800
Senior Contributor

Re: Does just having large balances affect your score?

My DW has more than you (PSFL) and her scores are around 820.

Her Fico8 scores for car and credit cards are 830-850.

They don't hurt you much (if at all) if you have no lates.

 

Rebuild started in 2014  -  $100k unsecured credit in 2017  -  $400k unsecured credit in 2022.

DON'T WORK FOR CREDIT CARDS ... MAKE CREDIT CARDS WORK FOR YOU!


Message 2 of 11
sueblue34
Frequent Contributor

Re: Does just having large balances affect your score?

I know alot of ppl may say no but my scores are in the 660 range and the most common message I get is "PROPORTION OF LOAN BALANCES TO LOAN AMOUNTS IS TOO HIGH" I know this is because of my student loans which are about 180K because I keep my util very low. Even when I applied for a mortgage the lender said my profile was very good except the high student loan balance so I think creditors sill give you a side eye and use it as a denial reason when they just dont have any othe reason to deny you. I also have a good DTI.

Message 3 of 11
tschaet
Regular Contributor

Re: Does just having large balances affect your score?


@sueblue34 wrote:

I know alot of ppl may say no but my scores are in the 660 range and the most common message I get is "PROPORTION OF LOAN BALANCES TO LOAN AMOUNTS IS TOO HIGH" I know this is because of my student loans which are about 180K because I keep my util very low. Even when I applied for a mortgage the lender said my profile was very good except the high student loan balance so I think creditors sill give you a side eye and use it as a denial reason when they just dont have any othe reason to deny you. I also have a good DTI.


That's what I was thinking.  While just having a high balance itself may not deeply affect your score, it obviously still shows on your report and plays into the decision making from some lendors who place emphasis on debt-to-income ratio.  

$1700$2000
5/2022 Credit Karma Scores:

April 2022 FICO Scores:

May 2022 FICO Scores:
Message 4 of 11
ccquest
Established Contributor

Re: Does just having large balances affect your score?

Credit score doesn't take income into account to measure any debt to income. But as mentioned, that is a very important item that is considered by other creditors when making lending decisions.

My FICO 8s are all about 815-820 right now with ~$120k student loans with an income lower than that. Still got a good refi rate on my student loans again earlier this year (June) after getting decent rates back in Feb 2018.

For sueblue34, I'm not sure what's going on exactly but I feel like there might be some other negative factor in there? Like number of accounts with balances, number of new accounts, age of accounts, etc. My mortgage, auto lending, and credit card lending scores all say "Short Account History, Accounts With Balances, Seeking Credit, Many New Accounts" while the 8 is only positives.
as of 11/27/22
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Message 5 of 11
Shooting-For-800
Senior Contributor

Re: Does just having large balances affect your score?

DTI is a completing different area and discussion. 

My DW owes more than her original balances. 

I would bet than someone with 50k of student loans and 100k of income would have the same or lower score than someone with 100k of student loans and 200k of income.

I have also played with the Experian simulator and her score does not even move making a $50k payment.

JMO.

Rebuild started in 2014  -  $100k unsecured credit in 2017  -  $400k unsecured credit in 2022.

DON'T WORK FOR CREDIT CARDS ... MAKE CREDIT CARDS WORK FOR YOU!


Message 6 of 11
calyx
Super Contributor

Re: Does just having large balances affect your score?

Having a high balance installment balance doesn't really impact your score a lot (it does, but not compared to revolving utilization).   

Yes, upon manual review (like when taking out a mortgage) or any other time human eyes start looking at your credit files, it may be taken into consideration (particulary for DTI), but for scoring?  It's not that much.   It's why it's important to understand that credit/lending decisions are not determined by your score alone (I think people forget that quite often).


Happy practitioner of AZE7or8or9or10 | Team Finances > FICO
Message 7 of 11
TwoStacks
New Member

Re: Does just having large balances affect your score?

If you have a stellar history, no. BUT, the large balances will definitely impact DTI for installment loans. 

Message 8 of 11
tschaet
Regular Contributor

Re: Does just having large balances affect your score?

Hmm, while looking at my FICO scores on CreditCheckTotal, it lists this:

 

"FICO® Scores weigh the amounts paid down and balances of mortgage and non-mortgage installment loans (such as auto or student loans) against the original loan amounts. In general, when an installment loan is first obtained the balance is high. As the loan is paid down, the balance decreases. As installment loan balances decrease, they have less impact on a FICO® Score. Having a low installment loan balance to loan amount ratio is considered slightly less risky than having a 0% installment loan ratio. Consolidating or moving debt from one account to another will usually not help a FICO® Score since the same total amount is owed and the score may go down due to opening a new account."

 

It lists "Amount of Debt" as 30% of your FICO8 score.  When I click on the accounts it is mentioning, it takes me to my credit cards and also my student loans.  My student loans are on IBR plans to be forgiven after 20+ years and my IBR payment is less than the interest, therefore I will never really touch the principal....

$1700$2000
5/2022 Credit Karma Scores:

April 2022 FICO Scores:

May 2022 FICO Scores:
Message 9 of 11
OniStringer
New Contributor

Re: Does just having large balances affect your score?

Very helpful info 


@Shooting-For-800 wrote:

DTI is a completing different area and discussion. 

My DW owes more than her original balances. 

I would bet than someone with 50k of student loans and 100k of income would have the same or lower score than someone with 100k of student loans and 200k of income.

I have also played with the Experian simulator and her score does not even move making a $50k payment.

JMO.


 

Message 10 of 11
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