Student Loans

[Anonymous]

I am a college student with about 40,000 in student loans. I do not have a lot of credit card debt or any other negative items. I want to go to law school which will be another 50-70K in loans total. How will this affect my FICO, my score is already low 667. Do my student loans affect it now even though they are still deferred?

[Barry]

While the addtional student loans will not particularly 'help' your score, you should still be able to maintain a good score while this debt accumulates as long as: 1) the loans are either in a 'deferred' status or are being paid on time, 2) all other accounts are paid on time, 3)credit card balances remain low, and 4) you avoid any unnecessary account openings.

While the scoring formula does look at deferred student loan balances to some degree, their negative effect will only be very minimal since installment type debt (mortgage, auto, student loan) is looked at much less critically than revolving (credit card).

[Anonymous]

I have been recently getting FICO reason codes (for my score being lower than it should be) based on my installment loan balances being too close to the maximum. Like you, I have student loans, so it'll be a while before that number goes down a bunch. So, it may affect your FICO a bit, but probably not much.

Installment utilization doesn't appear to hit as hard as revolving utilization, but it does seem to be a factor based on the reason codes I get on my reports (especially TransUnion).