->How FICO Calculates Student Loans

Discussion in 'Credit Talk' started by FedUp2003, Aug 10, 2003.

  1. FedUp2003

    FedUp2003 Well-Known Member


    I used some Federal Student loan(s) to help pay for college, I just graduated this May, and my repayment doesn't start until December this year.

    On my CR's, this total amount is showing as an Installment account. It shows the balance and $0 as my monthly payment with 2 CRA's and $185 payment with the other, and with PG they show those little green dots for each month, etc... to show your past 2 yrs. payment history, and well, they show all green for the past 2 years, and in the remarks section it says "Student Loan - Payment Defered" or something similar ... and EX and EQ are showing current or paid as agreed and TU is showing as Unrated.

    Does anyone know how this account is affecting my FICO?

    Good, Bad, or otherwise?

    Could be good, as it shows current and history since 1999 (when I first got the Fed Student loan)

    Could be bad, a high amount of Installment debt left to be paid?

    Otherwise? I hear people say that mortgages and Student loans are good debts cause you get something for them ...

    My only other installment debt is an auto loan, around $17K remaining (and a mortgage showing up as Real Estate and not Installment)

    Anyone know how the Student Loan might be affecting my score?

  2. FedUp2003

    FedUp2003 Well-Known Member

    Anybody got any ideas?
  3. juliedeale

    juliedeale Well-Known Member


    thanks for asking the question. I have student loans also, and have paid them as agreed. Only thing is when I went into BK I deferred them for a year. Now Equifax has the dibbs on reporting for Sallie Mae, TU and Exp can get them "third party" from EQ, currently TU is reporting from EQ (third party) but it is really old, like a year old so it shows "in deferrment. I'm thinking if TU had current information it would help my score.
  4. klingsor

    klingsor Well-Known Member

    It's been my experience that the total amount of loan debt has really little impact on the score. Lenders might think otherwise though but FICO itself is more concerned with credit card debt, ie your balances on your revolving accounts.

    There IS a slight negative impact that having ANY installment loans on your account seems to have because, apparently, they are viewed as a risk if you have had anything short of a spotless history. But we're talking very slight here.

    To give you some idea, I have about $14K in student loans -- currently deferred -- and only Equifax reports them. Well since they're quite old they're giving me a nice chunk of history which is boosting my score by more than 25 points as compared with other bureaus.
  5. FedUp2003

    FedUp2003 Well-Known Member

    Thanks Klingsor,

    That's kinda what I'm looking for, as to whether or not having a Student Loan show up on the CR is hurting or helping my score and not really affecting it.

    It has no derogs, cause I've not even started my repayment yet - starts this December. EX and EQ show Paid as Agreed and TU shows Unrated ...

    I was just wondering about the $17K balance due that I will soon start paying on. I know that having high CC debt, or high balances to limits can lower your score, I just didn't know how Installment loans are viewed or scored by FICO, and whether or not a Student Loan tradeline was treated/scored any different than other Installmen loans (car, house, etc ...)

    Does anyone else know how or if Student loans affect credit SCORES?

  6. dario1979

    dario1979 Well-Known Member

    Okay this is the deal with student loans.... It makes no difference if they are in forbearance, deferment, or repayment they are not rated so they will have no effect on your fico score. They will however hurt your score if they are past due then they are treated like a regular instalment loan. Heres the kicker if you apply for credit from a company like MBNA or USAA where they manually review your report then it will work in your favor if they are in repayment and you havent missed any payments because they will look at them like its a regular instalment loan. I am also pretty sure that they count towards your debt to income ratio however i think its against the law to have your income be considered as part of your fico. i am not 100% sure on this information but from the conversation that i had with the people at transunion this is accurate.
  7. WeatherNLU

    WeatherNLU Well-Known Member

    I wouldn't say that. I consolidated my loans (5 into 1) and my score dropped 14 points. Couldn't be because of age of newest account, because a credit card that just started reporting a couple of days earlier dropped my score for that reason 11 points. Maybe it was a double whammy.
  8. juliedeale

    juliedeale Well-Known Member

    I was under the impression that FICO was affected by your "mix" of credit types. I thought having installment loans mixed with my CC would help?
  9. FedUp2003

    FedUp2003 Well-Known Member

    Okay, let's see if I get this right,

    As long as I'm not late on payments, then the Student Loan does not factor into the FICO score, and since it's not currently in repayment (still in deference) then it can't factor in right now anyhow.

    But, if I apply for credit and an OC manually revirews the CR, it could be positive cause they see this as an Installment account (as long as I'm making payments on time) ... but, could it not also be a negative as far as how much total debt I have?, esp if compared to debt / income ratio.

    I see how FICO can't factor this, cause FICO doesn't know my income.

    I just thought that FICO somehow looked at how much debt was in your CR and factored that in, and that revolving debt, Installment debt, and Student Loan debt were all figured/calculated a little differently.

    Are you saying that Student Loan debt is TOTALLY ignored by FICO, as long as it's not in repayment yet and if in repayment that it's always been paid on time?


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