STUDENT LOANS

[mcubi]

Hi

I have 8000.00 in private student loan and 53000.00 in federal student loans that are reported as educational loans, current and never late. The total monthly payment for both is 256.00.  Eventhough these accounts are positive, the scoring system is treating them as a negative factor for being a high non mortgage balance.

The simulation tells me I should pay them down but I cant afford to pay off my student loan right now and I don't intend to rush on it. I was always told that student loan balances doesn't affect home buying eligibilties as much as high credit card balances.

I need to know if there's a way to increase my score without paying down on my student loans quickly.

[Anonymous]

What are your scores and what other negative reasons does it give?  This sounds like a negative reserved for someone with high scores and/or little to complain about.

Revolving utilization (current balance over credit limit) is a much bigger part of your score than installment utilization.  It is likely not hurting you as much as if you were to have the $61000 on credit cards.  If it is not in your best interest to pay them down right now I would ignore the complaint completely and see if there is anything else you can work on.

Edited to add - if the current reported balance is higher than the original balance that might be why it is yelling at you.

Message Edited by rmily on 12-17-2008 06:09 PM

[mcubi]

TU749,EX753,EQ725

It's saying I don't have a long credit history, credit uitlization is 82% due to a balance of 580 for an account limit of 700, and lastly, my remaining balance of non mortgage installments is too high (which is my student loans)

I already paid off my 580 balance so I'm going to see if that would boost up my score a little.

Thanks for your response!

[Anonymous]

So do student loans affect crdit scores? I am a current student at the community college level and plan on attending a University and have my loans deffered since I am still a student. I do know that I cannot consilodate them because I am still a current student, but am looking into building my credit to buy a home this next year. 

[llecs]

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@Anonymous wrote:

So do student loans affect crdit scores? I am a current student at the community college level and plan on attending a University and have my loans deffered since I am still a student. I do know that I cannot consilodate them because I am still a current student, but am looking into building my credit to buy a home this next year. 

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Any account reporting can impact your FICO scores, positively or negatively or both. Depends on what is reporting in relation to your overall credit.

Per FICO, a SL is considered an installment loan and scored on par with other loans like auto loans, personal loans, etc. It doesn't matter if private or federal.

In the case of OP, his/her balances were too high on his/her loans and that can be a negative scoring factor. It's relatively minor ding though.

[bahbahd]

The positive tradelines for each loan disbursement date does not hurt your credit, quite the opposite actually. Just pay your minimums each month and you will be blessed with having many great positive accounts on your credit reports. Yes, the simulator will advise you that being too far in debt is bad, but in the long run the all the positive histories will only help you, will remain for 10 years after they have been paid off, will help boost your AAoA, etc. Having a large number of SL accounts will also help put you into a higher FICO bucket.

[loviedovie]

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@bahbahd wrote:

The positive tradelines for each loan disbursement date does not hurt your credit, quite the opposite actually. Just pay your minimums each month and you will be blessed with having many great positive accounts on your credit reports. Yes, the simulator will advise you that being too far in debt is bad, but in the long run the all the positive histories will only help you, will remain for 10 years after they have been paid off, will help boost your AAoA, etc. Having a large number of SL accounts will also help put you into a higher FICO bucket.

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This is good to hear. I had always thought as much but I am still in grad school and was worried that upon graduation when my loans come out of in-school deferment it would somehow change my credit score...

For the time being, I am listed as having 61 tradelines never late, pays as agreed. (The loans come in 4 or 5 chunks every quarter). So this seemed to actually help me when I went for an auto-loan.  

[Anonymous]

Thank you guys for your input and advise. I am glad I asked for now I have a better understanding. 

[Anonymous]

as per my experiance studet loan lenders applying high rate of repayment installment systems that is the reason so many student is not able to repayment the loan so i just say before you applying please read the rules & regulation & make sure about your interest rate.