Next March, I will qualify for PSLF and have $106K forgiven. Once that is done, my total debt will consist of around $40K (around 30% Util) in credit card debt and $35K in auto loans. Since more than half of my total debt will disappear, what impact would it have on my credit score since I will still have revolving and installment debt outstanding? Present scores are around the 710s.
@pi-r-squared wrote:Next March, I will qualify for PSLF and have $106K forgiven. Once that is done, my total debt will consist of around $40K (around 30% Util) in credit card debt and $35K in auto loans. Since more than half of my total debt will disappear, what impact would it have on my credit score since I will still have revolving and installment debt outstanding? Present scores are around the 710s.
I wouldn't get my heart set on a big score increase. It will greatly improve your debt to income ratio, which helps your creditworthiness but isn't reflected in your scores.
The installment loan utilization will be improved, but the only limits that will be factored in are those from your auto loans. My experience has been that gains in installment utilization are not meaningfully reflected in scores until the utilization gets below 10%.
Your improved cash flow should help you knock off some of the credit card debt, which will help your scores a lot.
But let's keep our eye on the prize: you will be shedding $106k in debt. That is awesome!!!! Congratulations.
It should not impact your score dramatically.
Student loans don't hurt scores much if payments are current regardless of balance.
Congrats!
