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how do creditors view/weigh student loans


moonwife
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It is installment debt, not revolving. It is weighted much differently. Similar to a mortgage. My scores have never been higher and I have close to six figure student loans and a substantial mortgage. As long as the revolving debt (ie: credit cards) are kept at $0 or close to, you should be okay.

Note that I pay extra each month towards the student loans with the highest apr and also to the mortgage to speed up payback. I don't want to be servicing the interest forever. It probably doesn't boost the scores much, but it can't hurt.

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Just take a quick look at the CB reason codes from Trans Union...

http://www.michigan.gov/documents/cis_ofis_fair_isaac_reason_codes_31880_7.pdf

Installment debt helps you by increasing the length of your credit file (because most installment debt lasts for years).

Also, not being late ever on installment debt helps you.

It's telling that there isn't a reason code for too much installment debt or monthly payments too high. FICO doesn't care about installment other than the fact that you merely have the presence of it on your file and that you're never late. One 30 day late on an installment can drop you 50 pts, even several months after the fact.

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I have 3 student loans, and while I had a car loan, I got the comment once on a score report "too many installment loans". This was in the section with advice for improving your score. So in that way it can hurt you. I don't see this listed in the list of fico codes above, so it could have been a comment on a fako score report. They look at the total amounts owed on your whole report, in addition to looking at the utilization on the revolving accounts.

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I have 3 student loans, and while I had a car loan, I got the comment once on a score report "too many installment loans". This was in the section with advice for improving your score. So in that way it can hurt you. I don't see this listed in the list of fico codes above, so it could have been a comment on a fako score report. They look at the total amounts owed on your whole report, in addition to looking at the utilization on the revolving accounts.

This list I posted is incomplete. FICO doesn't publish reason codes 41-50 and 89-100. I'm pretty sure that "Too many installment loans" is a valid FICO reason code...

To clarify: there isn't a reason code for too much installment debt. There is a reason code for too many installment loans. Go figure.. I also think this does not affect FICO scores more than 10-20 points.

Edited by Bigwoodystyl
clarification
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I have 3 student loans, and while I had a car loan, I got the comment once on a score report "too many installment loans". This was in the section with advice for improving your score. So in that way it can hurt you.
I get that comment too. I just don't think it matters a whole hill of beans. Five years ago, I had no installment loans and awful scores. I now get the "too many installment loans" because of ten student loans and a mortgage I have taken on. And my score is consistently over 725.
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