I recently consolidated a substantial credit card debt into student loans for the lower interest rate. I don't know anything about how student loans will change my credit score and have had a lot of trouble finding out useful information online. I expect to apply for my first mortgage within 3 months of finishing school (4 months before my loans go into repayment). How will my lender calculate the payments owed on my loan (will they take the eventual repayment amount? will Stafford report the loan as having a 0 monthly payment until it enters repayment?). I will be moving into an expensive area for my job and expect that I will be very close in the income to payment calculation when I include my existing monthly debt service into the calculation. In general, what should I expect to see in my credit score when I take out a student loan that is pre-repayment. I have a long credit history (14+ years), 2 30 day lates, and the primary current problem in my score is that I'm using over 70% of 3 credit cards. Even with this my score is still slightly above 650. The student loan will allow me to move below 50% on all the cards. Finally, when do student loans show up on credit reports? When you first take them out? When they go into repayment? Sorry for the long post, let me see if I can summarize: 1. How do student loans change credit scores. 2. How will a pre-repayment loan be looked at by my lender. Thank you so much for all the info. And for the motivation to try to take care of the 2 30 day lates on my report (from 1998!). yensid
ok...well.......deferment is the word! If it is deferred then it wont be counted. ALSO......whenever looking at debt, if the debt will be paid off within a 10 month time (such as a cc with payments of 35 a month and a balance of say 200) it will NOT be counted against your debt ratio. Student loans and scores.......I have cleared up some old student loans on a VA loan recently and it made no dofference on the fico when deleting the duplicate accounts... so...basically I am saying that...well.......I dunno what will happen with the student loans and how it will affect it. Hey 1 outta 2 aint bad right?
Be careful with what you do with those two 30 day lates. If you dispute with the CRAs and they don't get an answer back from the OC, they could delete the TL altogether. If it is just a 30 day late on an otherwise good Tl, you might want to rethink how you go about it. Possibly a Goodwill letter to the OC, especially since the lates are fairly dated and if you have been timely with the TL since. If the lates were in 98, they will fall off next year on there own. If you are not looking for a mortgage until after the 30 day lates are due to drop off because of the 7 year rule, I would seriously reconsider disputing the lates with the CRA's. I had one of my oldest TL deleted by the mean old CRA when I disputed as never late. The CRAs answer was, "The OC never responded, so we HAD TO delete the entire TL" I still have not been able to get the TL back, even with the late notation,which was rather old as well. 3day Just a caveat, one of the Gurus may have something to say.
Thank you both. Especially for the reminder that disputing a 30 day might remove the tradeline - which is, exactly what happened (2 day turnaround from the time I disputed to the time it was removed). It was a short tradeline though and not a particularly old one on my report. Still looking for info from people who've seen how a student loan plays out on the report. Again, the loan will not have entered repayment when I apply for the mortgage and I want to know how the debt/income ratio will be calculated. Thanks everyone for the help again.
Thanks! I think I was looking into the details of your previous post and missed the first line!. So what I get out of this discussion is that if I think I'm going to buy a house within one year of finishing school, it makes sense for me to attempt to do so within 6 months (the deferment period) from the debt/income perspective. Many thanks.
Remember, there are a lot of different types of deferments and forbearance options. If you are looking to keep the SL payment out of your debt to income ratio, you could probably use a forbearance to keep the payment off of your CR. At least until you have your mortgage closed. I have quite a few/large SL and it is easy for Sallie Mae to mess things up royally. Best advice I can give is keep up with all of your paperwork, make sure they have your current address. it isn't SM's responsibility to keep your address current, it is yours and if you go inti default because you aren't getting paperwork from your loan holder, it isn't pretty, I know. As far as SL affecting your report/fico. I just went through a dispute with Experian for some Sl that I paid through consolidation. Experian added 20 new negative entries for my SL and then added about 15 more entries that show my loan , the amount and noting it as transferred to another lender and they seem to be affecting my CR in a positive way. The really strange thing is, my score jumped about 20 points? So just having the loans on there, even if they are in deferment/forbearance may help you. I really don't get what happened. Experian is so screwed up! Now some of my SL are reporting 4 seperate times on my CR! Yikes! Maybe Butch will read this and help me with it. Ooooh Buuuutch! ~ 3DAY
Thought I'd add some data. My SL posted to Equifax. It shows up with a monthly payment, but states in defer. Playing with the FAKE-O score simulator, removing the loan TL results in no change to my score at all. Paying off half the loan results in no change to my score. Paying off 2/3 of the loan results in no change in my score. So there you go, student loans don't seem to have much of an effect... Thanks again for the input everyone...
