Paying off old student loans with new loans

[Anonymous]

Would it make a difference if I paid my old ( from 2000) student loans, $5000.00, with new student loans? Would this increase my credit because old debt is paid?

[calyx]

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@Anonymous wrote:
Would it make a difference if I paid my old ( from 2000) student loans, $5000.00, with new student loans? Would this increase my credit because old debt is paid?

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Without more information, we can't say for sure.   Are thse old loans defaulted or delinquent?

If everything is in good standing, then it might actually lower your credit score.  A new account will reset your "age of youngest account" (AOYA) and lower your Average Age of Accounts (AAoA), which might hurt your score.   In addition, the new Installment loan will be at a 100% utilization.     The impact of installment utilization isn't entirely understood (and doesn't seem to be big), but it definitely won't help to have a 100% utilization.

If your loans are defaulted or delinquent, then yes, paying them in full will help, but the negative information will still be on your credit report and will hurt for a while (depending on when they went delinquent).

[Anonymous]

My loans are not delinquent or in default.
I appreciate your advice. I will continue to chip away at my loans until they are paid off.

[calyx]

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@Anonymous wrote:
My loans are not delinquent or in default.
I appreciate your advice. I will continue to chip away at my loans until they are paid off.

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Glad I could help!   For a lot of people, their student loans are their oldest accounts and it's usually really helpful.

[Anonymous]

There is an even deeper issue here than simply shifting debt. If you get new student loans, those loans are to be used to pay for new educational costs. If you were able to get new student loans, especially federal, and you have no actual need for the aid (your tuition, housing, etc. is already covered) it is highly likely some amount you reported in your FAFSA is inaccurate. This would be what a personal loan could be used for but I also recommend against it.
Second, older federal loans tend to have better rates though a 2000 loan might have a variable rate.
If you have an older loan that still has a balance, and you are having trouble paying it off, look into Income-driven repayment plans. If you've been on one of those plans, such as income-based repayment or REPAYE, , your loans are probably well on the way to forgiveness. Even if you aren't interested in forgiveness, they can be helpful to lower your minimum payment and allow you to pay down your loan with extra payments as you can handle them.
Without knowing the details of your loans it's hard to provide further information. Good luck. 🙂

[Anonymous]

I didn't supply any inaccurate info.
I am already on and income based repayment plan. I wouldn't let any loan get to the forgiveness point (25 or 30 years) because it will be added as taxable income. I don't qualify for a PSLF.
I've paid quite a bit out of pocket and was trying to find a way to boost my credit.

[Anonymous]

REPAYE loan forgiveness is at 20 years. You just have to switch from IBR to REPAYE (there is a standard payment in between that can be reduced and interest would capitalize.)
Yes, the forgiven amount could be added as taxable income but you would have to be solvent. I can give you a link to the article that it explains it, with examples, but basically most people are *not* solvent at loan forgiveness (this does not mean that you are not financially responsible).
Most people with any kind of a mortgage, car loan etc. fall into this category. Even if you have more assets than you have debt, it might be worth it to consider taxes on $5000 vs having to pay off $5000.
If you've paid quite a bit, the next threshold for a boost is probably the one when it's almost paid off. Installment loans are expected to stay high and be paid off over time. You can get over 800 credit score with a high utilization loan if everything else is optimal.
Looking at your scores it's definitely something else on your credit report that's keeping it down. Your loan isn't in default. What else could it be? If you are willing to share, then there might be something else that can be fixed.
There are also threads on credit repair and FICO scores. They can give you very detailed information on what specifically is weighing down your score with excellent advice on how to repair it. I ask for help there all the time. They really know their stuff.

"Defusing the Student Loan Forgiveness Tax Bomb"
https://lawyerist.com/defusing-student-loan-interest-tax-bomb/

[calyx]

^^ What Sabii said.

Your scores do seem to be low.  If you need help understanding scoring or improving your score, please look around the forums, there is a lot of good information.

If you are comfortable sharing, the Rebuilding forum in particular can be VERY helpful if you are willing to go into the details of your credit history.

[Anonymous]

I wasn't sure, but yes, just looked it up and using new federal student loans to pay for old student loans is fraud. If they find out, they can call them due at any time.

[Anonymous]

Thanks for your help. I didn't take any new loans out. My scores are higher thanks to the rebuilding forums. I don't know how to update them but will figure it out later.