cancel
Showing results for 
Search instead for 
Did you mean: 

Very Important Studant Loan Question

tag
bsal
Frequent Contributor

Very Important Studant Loan Question

Ok guys and girls I need your expert questions on this one. I have a 2000.00 dollar student loan thats about to come out of defult cause im in a loan rehab program; now i know my score should rise a lil after it comes out, but my real question is this, that loan is the only installment i have on my credit, with a balance. I have no credit cards no car loans no nothing, My question is this when my Loan comes out of default should i just pay it off? and if so once its paid off will it lower my fico score since i will no longer have a balance? or should i just pay very low monthly payments just to have some type of balance on my credit report, What should i do anybody know? please help?
Message 1 of 13
12 REPLIES 12
bsal
Frequent Contributor

Re: Very Important Studant Loan Question

I SEE I HAD 16 PEOPLE VIEW CAN NOBODY HELP ME ON THIS TOPIC OR YOU JUST DONT WANT TOO? I REALLY NEED HELP ON THIS TOPIC CAN ANYBODY HELP ME?
Message 2 of 13
Anonymous
Not applicable

Re: Very Important Studant Loan Question

if you can pay it off, financially that is the way to go. However the longer your pay the more positive history you acquire. I would think for FICO scoring you may want to apply for a few credit cards once this comes out of default. Think long term. The longer you have credit and use it wisely the better.

I do believe you will see a jump after the default status is gone, but because it is your only TL I would think you could maximize by adding a few accounts.

Honestly I don't know specifically what will happen. If you can pay it off I find it best to do so. Only after default status is gone!
Message 3 of 13
bsal
Frequent Contributor

Re: Very Important Studant Loan Question

thank you for answerin my question. I do plan on applying for credit onces this loan gets out of defult. but how many credit cards should i apply for because i also do not want to get hit with alot of hard inquires cause wouldnt that lower my fico as well?
Message 4 of 13
Anonymous
Not applicable

Re: Very Important Studant Loan Question

I started applying for credit in 2006 after paying off my loans. I started with three cards. I got a new one every six months. I started with Macy's, then went on to get HSBC, and Wamu. Today I have a drawer full. IMO I think one MC, one Visa and one Amex is a good start. Along with one store card.

As i said I like doing it at six month intervals. This way by the time you are applying for card number three there is only one inquiry on your report. But also try to check out who gave me credit. if you do it right you can get the inquiries spread across all three bureaus.

This should help you build a good score. I have gone up about 175 points, and I still have some baddies reporting on mine. So it is possible with your report to do even better.
Message 5 of 13
bsal
Frequent Contributor

Re: Very Important Studant Loan Question

how long did it take u to go up 175 and if u dont mind me askin what was yo fico then and what is it now?
Message 6 of 13
Anonymous
Not applicable

Re: Very Important Studant Loan Question

2 years and a few months. It does not happen overnight. I started at 504 on TU in late 2005. I paid off my loans in late 2005. In August 2006 I got a Macy's card $100 (Now $1500), I used it twice and then in November I got HSBC $5000 (I think that was a fluke), and a WAMU $1500. Then in May of 2007 Chase and American Express.

I have scores from each month after that

June 2007 589
July 2007 609
Aug 2007 614
Sept 2007 601 - Got Second Amex and another Wamu
Oct 2007 623
Nov 2007 640 - Got Amazon Chase and Paypal
Dec 2007 660
Jan 2008 673 - App Spree 4 credit cards (BAD IDEA)
Feb 2008 653 - App Spree 5 credit cards (Gets worse)
Mar 2008 635
Apr 1 2008 654
Apr 22 2008 673
May 22 2008 683

I have 20 open TL's and 6 closed. I opened way too many. I think I could have maximized this by just having a few. So this is just my opinion, and what worked for me. I have 9 inquiries on TU and one collection as well as a student loan that reports as settled less than full balance. I have a overall Ratio of your revolving balances to your credit limits 2%.

I need to let the rest age, and I will be cutting some of the extra cards out. I hope this helps, and know that it takes time. It happened over two years and some months. I hope this helps.
Message 7 of 13
Anonymous
Not applicable

Re: Very Important Studant Loan Question

get a secured card that will report as a regular card- that will help establish some credit.  I also heard that jewelry dealers finance on credit pretty easily.  Finance a small piece of jewelry that you can pay on over time.  But DONT apply for too much or else the inquiries will kill you.  Tell them what your score is, so they'll have an idea wether or not you'll approve before you have them pull your credit.
Message 8 of 13
bsal
Frequent Contributor

Re: Very Important Studant Loan Question

thanks for responding and i do plan on gettin a secured card, but my main objective is to figure if i should just pay the school loan off in full when it comes out of defult or make slow low monthley payments because since thats the only installment i have on my credit with a bal i heard if i payed it off in full it will lower my fico score cause i will no longer have a bal on my report, is that true what should i do?
Message 9 of 13
Anonymous
Not applicable

Re: Very Important Studant Loan Question

Once you pay off the loan, there is no more history to generate positive points. This is why getting another trade line is imperative. Some people see no increase when paying off a loan, some get a slight increase, and others have a slight decrease. Each report is different as there are usually other factors involved. I can not say for sure if yours would go up, don or stay the same. I had positive points but I added credit along the way, even though I settled the account. Which is a derog. If I had paid it off I think I would have seen a jump in scores.
Message 10 of 13
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.