First Time Student Loan

[Anonymous]

Hi All,

I am due to accept student loans for the upcoming fall semester and have zero experience with the student loans. I would like to know what impact can I expect on my report/fico8/9 when the loan starts reporting?

Currently, I have several cc, but no installment accounts.

It is a Fed Stafford loan (unsubsidized) @ 7.06%, if that matters.

Ps, another fico member has the same question, So by answering this, you would be helping 2 prospective students  

@GeePee

Regards,

Dhi

[Anonymous]

Can you confirm that you have no closed installment accounts either?  So basically no loans, closed or open?

If so you guys could be a big help to the broader community by testing this out.  We'd need you to....

*  Pull your reports once a week (easy to do with Credit Karma)

*  Keep your credit card amounts reporting to the bureaus stable  That means always having the same pattern of balances reporting.  A simple way to do that is to implement AZEO (all zero except one, with the remaining card reporting a small balance).

*  After AZEO is fully implemented (but before the loans appear) pull all three of your FICO 8 scores (you can do this for a $1 at Credit Check Total).

*  After the loans appear pull your scores one more time.  (But make sure you are still in AZEO with the same low utilization.)

There is a good thing that will happen and a bad thing when your loans first report:

     (Good) You will go from no loans of any kind, closed or open, to one open loan

     (Bad) You will have for the first time a high installment utilization (you will owe 100% of the loans)

I am guessing that the good will be much greater than the bad.  But we can't know without someone giving us test data.  Would you and your friend help?

[Anonymous]

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@Anonymous wrote:

Can you confirm that you have no closed installment accounts either?  So basically no loans, closed or open?

If so you guys could be a big help to the broader community by testing this out.  We'd need you to....

*  Pull your reports once a week (easy to do with Credit Karma)

*  Keep your credit card amounts reporting to the bureaus stable  That means always having the same pattern of balances reporting.  A simple way to do that is to implement AZEO (all zero except one, with the remaining card reporting a small balance).

*  After AZEO is fully implemented (but before the loans appear) pull all three of your FICO 8 scores (you can do this for a $1 at Credit Check Total).

*  After the loans appear pull your scores one more time.  (But make sure you are still in AZEO with the same low utilization.)

There is a good thing that will happen and a bad thing when your loans first report:

     (Good) You will go from no loans of any kind, closed or open, to one open loan

     (Bad) You will have for the first time a high installment utilization (you will owe 100% of the loans)

I am guessing that the good will be much greater than the bad.  But we can't know without someone giving us test data.  Would you and your friend help?

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Yes, No installment loans open or closed. I have 6 revolving/credit trade lines and that's all (no baddies). I would love to help by providing data points.. PS I had always been AZEO excluding this month. Wish I did not change my auto pay date on AMEX.  

[Anonymous]

I have student loans that have not entered repayment yet, and one small $2000 loan from Sallie Mae I have paid off.  I have yet to get my score over 780. I have a car loan at 40% paid off, and a car loan paid off. Oldest account 5 years 8 months. AAoA 2 years 2 months. Each semester that my loans disperse I lose approximately 5-10 points on Credit Karma... but that doesn't say much for FICO. I would assume your score will see a slight drop, but probably no more than 10 points.

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

Can you confirm that you have no closed installment accounts either?  So basically no loans, closed or open?

If so you guys could be a big help to the broader community by testing this out.  We'd need you to....

*  Pull your reports once a week (easy to do with Credit Karma)

*  Keep your credit card amounts reporting to the bureaus stable  That means always having the same pattern of balances reporting.  A simple way to do that is to implement AZEO (all zero except one, with the remaining card reporting a small balance).

*  After AZEO is fully implemented (but before the loans appear) pull all three of your FICO 8 scores (you can do this for a $1 at Credit Check Total).

*  After the loans appear pull your scores one more time.  (But make sure you are still in AZEO with the same low utilization.)

There is a good thing that will happen and a bad thing when your loans first report:

     (Good) You will go from no loans of any kind, closed or open, to one open loan

     (Bad) You will have for the first time a high installment utilization (you will owe 100% of the loans)

I am guessing that the good will be much greater than the bad.  But we can't know without someone giving us test data.  Would you and your friend help?

---

Yes, No installment loans open or closed. I have 6 revolving/credit trade lines and that's all (no baddies). I would love to help by providing data points.. PS I had always been AZEO excluding this month. Wish I did not change my auto pay date on AMEX.  

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Ask your friend if he or she could adopt AZEO as well.  Hopefully you can both get a month of AZEO in, then pull your scores -- before the loans appear.

Thanks!

[Anonymous]

@CreditGuyInDixie I dont know the other fellow fico forum member in person, she/he had same doubt like mine thats all the relation I have with her/him.

PS, I did accept the finacial aid award today for 9K$ for fall intake and 9K for Spring intake, Though I need not take so much I did it because I did not want my loans utilization show 100%. So Once the funds are avaiable to me after tution fee balance I will payback making my utilization look 45%-60%.

If you have any other suggestions please let me.

[Anonymous]

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@Anonymous wrote:

I have student loans that have not entered repayment yet, and one small $2000 loan from Sallie Mae I have paid off.  I have yet to get my score over 780. I have a car loan at 40% paid off, and a car loan paid off. Oldest account 5 years 8 months. AAoA 2 years 2 months. Each semester that my loans disperse I lose approximately 5-10 points on Credit Karma... but that doesn't say much for FICO. I would assume your score will see a slight drop, but probably no more than 10 points.

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When I spoke to financial aid person at school they mentioned there is no penalty for repayment when in school. Is it better to pay back the interest amount say 20$ every month when in school so that the principal is never capitalised with the interest? What are your thoughts on repayment of student loan.

[Kree]

This is not confirmed, but based upon my personal experiences, I do not think student loan utilization counts toward  the standard installment utilization scoring.  I have 12 student loans totaling 100k, all of them are above 100% uti. But my scores are still decent.  A few months ago I even had 750s.

[Anonymous]

Hi Kree.  Are your student loans in deferment?

It's easy to have a 760 FICO 8 score and be at 100% installment utilization.  The difference between 100% and 5% IU varies from profile to profile, but it is typically 25-40 points.  CC utilization, in contrast, has a huge impact.  If someone had a total CC utilization of 98% compared with 5% that person would take a gigantic hit.  A 760 would be basically impossible.

[Kree]

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@Anonymous wrote:

Hi Kree.  Are your student loans in deferment?

It's easy to have a 760 FICO 8 score and be at 100% installment utilization.  The difference between 100% and 5% IU varies from profile to profile, but it is typically 25-40 points.  CC utilization, in contrast, has a huge impact.  If someone had a total CC utilization of 98% compared with 5% that person would take a gigantic hit.  A 760 would be basically impossible.

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They are not in deferment. Interesting to know that it is only 25-40 point difference. Perhaps I am incorrect about it not counting.