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Student Loans - paying off vs paying down


Student Loans - paying off vs paying down

I had 5 student loans, totalling about $15k. I was feeling zealous and when I had some extra cash, I paid off one completely (about $2k). My zeal has continued and I'm down to about $3k total for all my student loans now.



Now knowing what I know about FICO scoring, I've had the idea to really draw back on how much I'm paying these. If Age of Accounts, and having accounts in positive standing helps your score, my logic is to keep these loans around for as long as possible, paying as little as possible after I get them down to $1k or so (so the interest will be minimal). As opposed to paying them off quickly, this means 4 positive accounts will stay open, and therefore stay on my report longer. As I understand it, paid off loans tend to fall off after a max of 10 years - so paying them off now means they'll stay for a max of 10 years, whereas paying them off over the next 3 or 4 years means they'll stay for 13 or 14 years - not to mention having 3 or 4 more years of open status for accounts in good standing.


I'm relatively new to the credit game, though, and was hoping some more experienced folks would give me feedback. Is this is a bad idea? Or am I thinking logically?

Message 1 of 3
Regular Contributor

Re: Student Loans - paying off vs paying down

I would pay them off. Accounts in good standing stay on your CR for ten years after they're closed - you are correct about that, and you're also correct that by waiting another three years to pay them off, you would ensure that they stay on your CR for 13 years rather than ten (if you paid them off now). That said, I think you may be overestimating the importance of keeping them on your CR long term. Assuming you have other TLs on your CR that you won't be closing at the same time, you'll still have those TLs contributing towards your AAoA. Also consider that when your SLs age off in ten years, any TL that you open now will be ten years old - so if you're really concerned about your AAoA, replace the SLs with new TLs as you pay them off.

I see your logic, but IMO it isn't a good idea to keep SLs around just for account age.
Message 2 of 3
Frequent Contributor

Re: Student Loans - paying off vs paying down

Pay it off! It always surprises whenever people hesitate on paying off student loans. I paid off a student loan in March. Good feeling. One more to go!

Message 3 of 3