Does taking out Stafford loans affect credit score?

[Anonymous]

I'm 25 years old and decided to return to school back in January. In order to finance my education, I'm utilizing subsidized and unsubsidized Stafford loans, which currently amount to $11,750. When all is said and done, I'll have about $30k in student loan debt (mostly subsidized). Exactly one year ago (before I decided to return to school), my FICO score stood at 814. Today, it stands at 734.

I was under the impression that Stafford loans did not affect your credit score unless you failed to make the required payments. My payments, of course, are deferred on both the subsidized and unsubsized loans until six months after graduation. I also opted to defer the interest on the unsubsidized loan. Other than the loans, nothing has changed financially. No new cards, no other loans, no late payments, don't carry a balance, etc, etc.

What gives?

[laz98]

they are still brand new accounts, & new accounts always cost you points.  also, you now have several accounts with balances, which is probably also costing you some points, & your debt level is a little higher, too.  i can't imagine student loans cost you 80 points, though, so are you sure nothing else has changed?

[Anonymous]

There's only one thing I can think of.

There used to be a store card listed on my credit report that dated back to 1996. As I mentioned, I'm 25 years old, so the card obviously wasn't mine. It belonged to my father (we share the same name) but it was listed on my credit report for some reason. That card was paid in full with no late payments or delinquencies, but there was no activity on it since 1999 when it was finally cancelled. I never resolved the issue because I figured it was actually helping my credit score. Anyway, the card seems to have disappeared from my report, so I guess they caught the mistake.

Other than that, nothing has changed.

[laz98]

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@Anonymous wrote:

There's only one thing I can think of.

There used to be a store card listed on my credit report that dated back to 1996. As I mentioned, I'm 25 years old, so the card obviously wasn't mine. It belonged to my father (we share the same name) but it was listed on my credit report for some reason. That card was paid in full with no late payments or delinquencies, but there was no activity on it since 1999 when it was finally cancelled. I never resolved the issue because I figured it was actually helping my credit score. Anyway, the card seems to have disappeared from my report, so I guess they caught the mistake.

Other than that, nothing has changed.

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it is possible that losing this card's age, combined with the loss of age because of new accounts, helped to drag down your score.

[mazinaige]

I agree with laz98, that the AAOA is what is bringing Aegis score down. Since 2002, I've relied on Stafford (sub and unsub) and the GradPlus loan to finance my doctorate degree, yet my FICO score has continued to slowly climb because I make every credit card payment on time and have a very low to no utilization. I do not have a car loan or mortgage. My student loans are not due for payment as I am still enrolled full time. I am curious what the debt-to-income ratio will do to my score once these loans become payable. Could I see a big score drop? I will be enrolling in the income based repayment/public service option to have the loans forgiven in ten years.

[laz98]

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@mazinaige wrote:

I agree with laz98, that the AAOA is what is bringing Aegis score down. Since 2002, I've relied on Stafford (sub and unsub) and the GradPlus loan to finance my doctorate degree, yet my FICO score has continued to slowly climb because I make every credit card payment on time and have a very low to no utilization. I do not have a car loan or mortgage. My student loans are not due for payment as I am still enrolled full time. I am curious what the debt-to-income ratio will do to my score once these loans become payable. Could I see a big score drop? I will be enrolling in the income based repayment/public service option to have the loans forgiven in ten years.

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nothing fancy happened when my loans went into repayment.  i have a hefty sum of them, too, so i would expect some change.

[Peach8321]

If the card was closed in 1999, then the 10 years it remained on your CR just finished (2009) and thus it was removed, that's standard practice.  If it was your oldest card by a lot (say, your next card is only 3 years old), it could have a huge effect, since credit history is like, 35% of your score.  Also, opening that many new loans with high balances can also affect your score.

Finally, are you sure the 810 score was a FICO score and not a FAKO? 

Regardless, you can build it up again, both with time and with good payments...the loans won't matter so much when they are no longer new but they did a hard inq on your report and then added a bunch of new accounts so, short term, the loans did affect your credit score.

hope that helps and good luck going back to school, I'm doing the same and I know it's hard.

[laz98]

as long as you are only taking out stafford loans, there should be no hard inquiries. i believe the only federal loans that require credit checks are the plus loans?  but i am NOT certain, as i have never taken one out.  but i know i have never had any hard inquiries for any of my bajillion stafford loans.

[mazinaige]

I didn't receive a hard inquiry for Stafford loans, only the GradPlus loans.