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Get loans restructured to avoid paying off accounts

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New Contributor

Get loans restructured to avoid paying off accounts

So I have ten loans, two of which have high balances and interest rates (all are 0% until Jan). I would like to get those two close to paid off but not pay them off completely so that they continue to help my credit score and age of accounts. Can I get close to paying them off, leave a small balance and then restructure my payment to each account so that I can not pay them off for a long time? What are the minimum payments for small balances? Can I somehow get away with small payments even if my income is decent?

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Super Contributor

Re: Get loans restructured to avoid paying off accounts

With the caveat that I have a single loan, and when I *did* have multiple loans, I made a single payment and the servicer disbursed the payment amongst my loans (so I'm not sure if it would work this way)...


I am essentially "stockpiling" my student loan payments right now (gotta make those pennies in interest!) and plan to make a massive payment when the 0% ends.    In my experience, paying "ahead" pays outstanding interest first, then principle, AND pushes out your "next payment due" date the appropriate amount.  My goal was to get them paid down to ~$200 and then just ride it out and pay nothing (or maybe an annual "interest" payment) until the very last 'due date' on my student loan.

Caveats:  if you are on any of the payment tracks that require recertifications (ICR, IBR, IDR), you have to recertify every year, and that will reset your next payment due, so it won't work.
You don't want to make a payment until after the 0% is over, because the next payment due will be when the loans come off of 0% (my next payment due is 2/12/22 regardless of whether or not I chip away at my loans now, I keep doing small payments to play around and check).


I know that I could push extra payment to a specific loan when I had multiple loans, but I don't know how much that would've helped in your circumstances (as in, I don't know if your servicer will say "hey @GatorCowboyLion  has only $50 left on loan #3, let's just pay it off with his payment and then divvy the others up).

Since I'm pretty Finances > FICO,  in your case, I would use the interest pause to just pay down your higher interest loans first and then worry about FICOs later (well, I, personally, would stockpile and then blitz your loans with payoffs at the end of the pause, just because I am ever hopeful for some kind of forgiveness, even if it's $5).   Installment loans have a far smaller impact on your scoring than revolvers, and closed loans can hang around on your report for 10years after the closing date.  I would pay them off highest interest to lowest and then ride out the last loan on your report like I will with my single, and you'll still have an open loan to satisfy the 'credit mix' of your scoring.

You can definitely "get away" with this on a good income *if you start after the pause* because your payment will be pushed out.    I had my payments pushed out to 10/23 before covid because of all of the extra payments I made.    I could pay -0- until then (though interest would accrue) without penalty as long as nothing weird (like an economy futzing worldwide pandemic federal pause) pops up.

Happy practitioner of AZE7or8or9or10 | Team Finances > FICO
Message 2 of 3
New Contributor

Re: Get loans restructured to avoid paying off accounts

Thank you @calyx! I did not know that paying a significant amount extra after the pause would push back my next payment date many months. Nor did I realize the importance of waiting until after the pause to trigger that. Also, I appreciate you going into depth on the caveats also. Certainly, I agree that Finances>FICO, but my finances are pretty well in order, and I want to position myself well to get a mortgage in a few years and so I am hoping to maximize my credit score as much as possible in the mean time. My goal is to pay the minimum amount of interest while maintaining all accounts open as long as possible. I appreciate your helpful post.

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