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Paying Off Student Loans and Getting New Loans

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Anonymous
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Paying Off Student Loans and Getting New Loans

Hi Everyone!

 

I start my core program in the spring, and I am trying to get my ducks in a row to apply for federal and private student loans.

 

Existing Loans:

I have about $3K combined with student loans. I am paying those off. How will this affect my credit score if I don't have any other active loans? From my understanding, I should have at least one active loan. If I have to, I can get a small personal loan from my credit union. Also, I have a delinquency from February 2015 that should fall off February 2022. I asked Transunion if they would do the 6-month goodwill removal, and the rep didn't understand me and told me to dispute it. How should I pose the question when I call again?

 

New Loans:

I don't think I should have any issues getting the fed loans, but I have no idea what to expect for the private loans, My husband (not legally married) will be consigning my loans. He makes well into the 6 figures and has 800+ credit scores. I am currently collecting unemployment because I am in school full-time, and my credit scores are between 675 and 705, but I expect a big jump in the next month because I received a pretty hefty CL increase on one of my credit cards and paid off the balance. I also opened a new credit card. I hope paying off my student loans doesn't screw me. The bad thing is that I have a bankruptcy from 2019 from personal guarantees falling apart from my business. The total loans I will need combined is $75K for the rest of my program over a 2.5 year period.  Will lenders touch me?

 

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calyx
Super Contributor

Re: Paying Off Student Loans and Getting New Loans

Your file would be better served if you keep a small amount open on one loan (wait to pay it off if you're paying it off early) rather than paying everything off and getting a new loan.    If you can keep your  utilization below 9% on the open loan that will maximize points.

A new loan usually means a hit to your aging metrics (AOYA, AAoA) and on some models will actually hurt your score more because of that - so you'd want to know what versions any private lenders use before going that route.

 

Early exclusions are for delinquent accounts, not lates, so I wouldn't push hard on that.

 


New Loans:

I don't think I should have any issues getting the fed loans, but I have no idea what to expect for the private loans, My husband (not legally married) will be consigning my loans. He makes well into the 6 figures and has 800+ credit scores. I am currently collecting unemployment because I am in school full-time, and my credit scores are between 675 and 705, but I expect a big jump in the next month because I received a pretty hefty CL increase on one of my credit cards and paid off the balance. I also opened a new credit card. I hope paying off my student loans doesn't screw me. The bad thing is that I have a bankruptcy from 2019 from personal guarantees falling apart from my business. The total loans I will need combined is $75K for the rest of my program over a 2.5 year period.  Will lenders touch me?

 


As for the private loan, I don't think a new credit card and CL increase will give you that big of a jump unless your utilizations is truly bad (maxxed out).   You have a pretty recent BK on your file and that's going to hurt you more than anything else, and you might want to check the BK forum to see if anyone has suggestions on BK friendly lenders.  I'm glad your partner can help you by co-signing as that will probably be the biggest help.    You've got a lot going on, so the private loan approval might be murky and you should probably talk to some banks to see how likely they are to lend to you.   Definitely work with your program to see if they have suggested lenders, as well as checking around with local CUs, and online lenders like Earnest.

Happy practitioner of AZE7or8or9or10 | Team Finances > FICO
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