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Student Loans Utilization

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Valued Member

Student Loans Utilization

My student loans original balance vs. current balance results in a 115% utilization.  Is there anything I can do to fix this?  Is it hurting my score?

 

Should I refinance/consolidate?  To start over with a new balance, and start paying the interest?  

 

Any tips appreciated!!

Message 1 of 13
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Established Contributor

Re: Student Loans Utilization

If it's over 90%, it's all the same. Don't worry about it unless you can actually make any sort of meaningful progress or consolidating somehow lowers your effective interest rate (it shouldn't).

Refinancing (if they are federal) would only make things worse.
as of 11/20/20
Current Cards:
Message 2 of 13
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Valued Contributor

Re: Student Loans Utilization

My DW has a TON of student loans and scores over 800.

Pay towards higher interest CC and loans first.

As long as no lates, student loans don’t hurt you score wise.

Rebuild started in 2014  -  $100k unsecured credit in 2017  -  $400k unsecured credit in 2020.

DON'T WORK FOR CREDIT CARDS ... MAKE CREDIT CARDS WORK FOR YOU!

5% Rotating - Discover                         5%-20% - Amazon & Lowes                   3-6% Groceries - NFCU & Amex Preferred
3-5% Gas - NFCU & Ducks Unl            4% Dining & Entertain - Savor               3% Travel & Hotels - Flagship, Propel, & Uber
2% Everything - Flagship & Syncrony






Message 3 of 13
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Re: Student Loans Utilization

I am working on purchasing a home and student loans (1 consolidated and 3 standard) and 3 credit cards (AZEO, 1% utilization) is pretty much the only debt I have. So paying the loans to decrease my utilization has been helping my score. The myFICO simulator is extremely helpful in determining what to pay. For example, paying $5,402 of $33,404 would not give me an increase, but $5,403 gave me +10 points on my FICO 8 and a few on my FICO 2. The interesting part is it actually mattered which loans I paid. It's almost as if the consolidated loan was calculated differently than the other 3 loans. After reading a lot of the posts on the forum I am starting to understand the aggregate utilization % of my accounts may be saving the day for me. 

I said all that to say....more information about your specific situation is needed to understand how to move forward with your student loans in a manner that benefits your score. 

Message 4 of 13
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Re: Student Loans Utilization


@juggernaut9 wrote:

I am working on purchasing a home and student loans (1 consolidated and 3 standard) and 3 credit cards (AZEO, 1% utilization) is pretty much the only debt I have. So paying the loans to decrease my utilization has been helping my score. The myFICO simulator is extremely helpful in determining what to pay. For example, paying $5,402 of $33,404 would not give me an increase, but $5,403 gave me +10 points on my FICO 8 and a few on my FICO 2. The interesting part is it actually mattered which loans I paid. It's almost as if the consolidated loan was calculated differently than the other 3 loans. After reading a lot of the posts on the forum I am starting to understand the aggregate utilization % of my accounts may be saving the day for me. 

I said all that to say....more information about your specific situation is needed to understand how to move forward with your student loans in a manner that benefits your score. 


Great info.

 

Why not consolidate all the student loans? I don't understand much of this, but wouldn't that help? I'm wondering if I can consolidate loans and then (since I'm going to attend school more), wait 2-5 semesters and consolidate again.

 

Good luck with your purchase!

Message 5 of 13
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Re: Student Loans Utilization


@Shooting-For-800 wrote:

My DW has a TON of student loans and scores over 800.

Pay towards higher interest CC and loans first.

As long as no lates, student loans don’t hurt you score wise.


That's awesome, but are you sure? In other threads on this forum, it says that student loans can hurt AAoA, DTI, and utilization.

 

On one of my reports, it shows my oldest CC account age (over 10 years) and then shows my AAoA. The recent student loans are completely wrecking my AAoA apparently.

Message 6 of 13
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Established Contributor

Re: Student Loans Utilization

Anything *can* hurt the metrics, once the accounts report the damage is done already though. If you consolidate, you'll be adding *another* new account on top which further hurts your scores, that new one will report as 100% balance again which hurts again. DTI depends on your term and loan amount.

None of those are inherently affected by it being a student loan though. As the many accounts age, it'll make your AAoA more resilient because each new account will be a fraction of your total. Imagine 10 accounts that are 5 years old (your student loans) then you add a new CC. That brings you to 4.5 years AAoA. If you had one consolidated loan that was 5 years old and added a new CC, instead you drop to 2.5 immediately.
as of 11/20/20
Current Cards:
Message 7 of 13
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Re: Student Loans Utilization


@ccquest wrote:
Anything *can* hurt the metrics, once the accounts report the damage is done already though. If you consolidate, you'll be adding *another* new account on top which further hurts your scores, that new one will report as 100% balance again which hurts again. DTI depends on your term and loan amount.

None of those are inherently affected by it being a student loan though. As the many accounts age, it'll make your AAoA more resilient because each new account will be a fraction of your total. Imagine 10 accounts that are 5 years old (your student loans) then you add a new CC. That brings you to 4.5 years AAoA. If you had one consolidated loan that was 5 years old and added a new CC, instead you drop to 2.5 immediately.

I'm most concerned with AAoA in my situation. True about them helping when they age, but I'm hoping to get a mortgage next fall or winter (I hope fall is an option), so I think I want to consolidate.

 

I have an extreme amount of student loans? 8 with average age of 15 months. Only two of them are over 18 months old. Looks bad as I also have a 1.5 year old cc (but I do have my 10 year cc). One HP plus brand new loan instead of the 8 seems better to me, especially once 6 months passes, but I guess it's a tough call.

Message 8 of 13
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Re: Student Loans Utilization


@Swatch wrote:

@Shooting-For-800 wrote:

My DW has a TON of student loans and scores over 800.

Pay towards higher interest CC and loans first.

As long as no lates, student loans don’t hurt you score wise.


That's awesome, but are you sure? In other threads on this forum, it says that student loans can hurt AAoA, DTI, and utilization.

 

On one of my reports, it shows my oldest CC account age (over 10 years) and then shows my AAoA. The recent student loans are completely wrecking my AAoA apparently.


Of course anything can hurt your scores, but...

She averages 815 Fico8s with 15% cc debt (Amex each month), a mortgage, a HELOC at 90% and 150% student loans that are over $200k.

So...how much could it really be hurting?  5 points?  10 points?

 

Huge difference between $50-$100k of cc debt and $50k-$100k of student loan debt.

She has two graduate degrees.

Thank God her loans are in Public Service Forgiveness Program.

 

Rebuild started in 2014  -  $100k unsecured credit in 2017  -  $400k unsecured credit in 2020.

DON'T WORK FOR CREDIT CARDS ... MAKE CREDIT CARDS WORK FOR YOU!

5% Rotating - Discover                         5%-20% - Amazon & Lowes                   3-6% Groceries - NFCU & Amex Preferred
3-5% Gas - NFCU & Ducks Unl            4% Dining & Entertain - Savor               3% Travel & Hotels - Flagship, Propel, & Uber
2% Everything - Flagship & Syncrony






Message 9 of 13
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Established Contributor

Re: Student Loans Utilization


@Swatch wrote:

@ccquest wrote:
Anything *can* hurt the metrics, once the accounts report the damage is done already though. If you consolidate, you'll be adding *another* new account on top which further hurts your scores, that new one will report as 100% balance again which hurts again. DTI depends on your term and loan amount.

None of those are inherently affected by it being a student loan though. As the many accounts age, it'll make your AAoA more resilient because each new account will be a fraction of your total. Imagine 10 accounts that are 5 years old (your student loans) then you add a new CC. That brings you to 4.5 years AAoA. If you had one consolidated loan that was 5 years old and added a new CC, instead you drop to 2.5 immediately.

I'm most concerned with AAoA in my situation. True about them helping when they age, but I'm hoping to get a mortgage next fall or winter (I hope fall is an option), so I think I want to consolidate.

 

I have an extreme amount of student loans? 8 with average age of 15 months. Only two of them are over 18 months old. Looks bad as I also have a 1.5 year old cc (but I do have my 10 year cc). One HP plus brand new loan instead of the 8 seems better to me, especially once 6 months passes, but I guess it's a tough call.


You're not fully reading what I'm saying though. Right now you have 8 with an average age of 15 months. If you consolidate, you'll have 9 with an even lower average age because they all stay reporting for up to 10 years AFTER closing. It'll also still be a "new" account in that it is under a year old by the time you want the mortgage.

 

It's not like the current ones just fall off and disappear. And you'd add another hard pull into the mix which drops your score even more. The only benefit to consolidating, to me at least (I could be wrong), is mental. You're not going to get a magically lower interest rate, you still have the same amount of debt outstanding, it just looks like one account instead of 8.

as of 11/20/20
Current Cards:
Message 10 of 13
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