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Paying off student loans question

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Anonymous
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Paying off student loans question

I almost have my student loans paid off even though they are in deferrement until 2017.  I am working a part time job while finishing my undergrad degree and 90 percent of what I make goes straight to those loans.  The issue is, even though i've been making payments on my loans they don't seem to be having any effect on my credit score.  Is this due to paying them while they are still deferred?  Should I wait to pay the remaining balances off when the deferment period is up in 2017 if I want them to have a possitive effect on my credit score?

Message 1 of 10
9 REPLIES 9
Luscher
Valued Contributor

Re: Paying off student loans question

Paying them will have very little effect on your score if any at all. You may see a score drop once they are paid off too because of the account closing. But in the long run paying off your debt is better.
CHASE FREEDOM | AMEX BCE | | BOFA REWARDS | CITI TYP | Quicksilver | DISCOVER IT | Sallie Mae | CHASE CSP
--------$32,000-------------$30,000-----------$30,000-----------$30,000-----$13,000---------$18,200----------$15,000---------$6,500----

FICO - TU: 780 EX: 784 EQ: 781
Message 2 of 10
SCF
Valued Contributor

Re: Paying off student loans question

The loans are having a positive effect on your credit, but it's not going to be measurable month-to-month.  The effects of AAoA and on-time payments are seen over the course of years.  The good news is that this loan will remain on your report 10 years after it is paid off, so the history you've built will continue to contribute to your score.  You'll also save interest and set yourself up for a good financial future by paying the loan off as soon as possible.

Message 3 of 10
Anonymous
Not applicable

Re: Paying off student loans question

This might be an unreasonable question, but would it be wise to pay off all the student loans except for like $1, let that accrue interest at a slow rate, and keep paying it off except a $1, so the history of the student loans can remain on your credit report?

 

Message 4 of 10
SCF
Valued Contributor

Re: Paying off student loans question

Not really, and even if you attempt to that, some borrowers will just write off the small balance and close the loan so they don't waste their own time and money servicing a miniscule debt.  By the time a positive account falls of your report, a decade has passed.  In that time, you can build new tradelines with positive history to replace the ones you lose.

Message 5 of 10
Luscher
Valued Contributor

Re: Paying off student loans question

Like SCF the lender will just write it off and close the account. I tried this with Salliemae and when they merged with Navient a little bit ago I noticed my account closed even though my account was staying with Salliemae. It probably cost them more to manage the account then the 1 cent for month they were going to get from me in 20 years lol
CHASE FREEDOM | AMEX BCE | | BOFA REWARDS | CITI TYP | Quicksilver | DISCOVER IT | Sallie Mae | CHASE CSP
--------$32,000-------------$30,000-----------$30,000-----------$30,000-----$13,000---------$18,200----------$15,000---------$6,500----

FICO - TU: 780 EX: 784 EQ: 781
Message 6 of 10
Anonymous
Not applicable

Re: Paying off student loans question

My mom did this and recently got a bill for like $300 or something from an old school loan like 20 years ago, apparently she left a tiny balance and they let it keep building believe it or not...
Message 7 of 10
Luscher
Valued Contributor

Re: Paying off student loans question

She should have kept an eye on it. If you leave a balance you should always expect to pay it back
CHASE FREEDOM | AMEX BCE | | BOFA REWARDS | CITI TYP | Quicksilver | DISCOVER IT | Sallie Mae | CHASE CSP
--------$32,000-------------$30,000-----------$30,000-----------$30,000-----$13,000---------$18,200----------$15,000---------$6,500----

FICO - TU: 780 EX: 784 EQ: 781
Message 8 of 10
Anonymous
Not applicable

Re: Paying off student loans question

She didn't realize she left a balance, that was the problem. She called them and they said back in XXXX year you had a balance of $0.XX which has accumulated interest since then... Crazy how it can happen like that.
Message 9 of 10
Luscher
Valued Contributor

Re: Paying off student loans question

Yea, its something you just need to keep a track of somehow, or just pay it off. Something that small can really hurt you down the road which is ashame

CHASE FREEDOM | AMEX BCE | | BOFA REWARDS | CITI TYP | Quicksilver | DISCOVER IT | Sallie Mae | CHASE CSP
--------$32,000-------------$30,000-----------$30,000-----------$30,000-----$13,000---------$18,200----------$15,000---------$6,500----

FICO - TU: 780 EX: 784 EQ: 781
Message 10 of 10
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