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college loans

SkiBumGolfer said:
Bumping this for a quick question if anybody has advice. I have very nearly paid off my student loans (have like 500 bucks left), and I could very easily knock them out right now. However, I've heard talk of folks' credit score bumping down after paying down student loans due to it reducing the variety of credit types on your report. This sounds like something that might happen for me, as I don't have a car payment and I don't have a mortgage - just rent, utility bills, and credit cards outside of this loan account.

Tips? Should I just knock the thing out and not worry about it, or could it have a negative effect?
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Wanna double dip? If you plan on paying the student loan off anyway, use a credit card (preferably one that has points, rewards, or cash back incentives) to pay the student loan off and then turn around and pay the credit card balance down/off.
 
Pay that loan off put half that money into a retirement fund the other half into savings for a down payment car/house in the future.

Your already surviving with out that $$$ available so make it work for you now and it will pay dividends down the road.


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DawgDaddy said:
I pay my utility bills each month with my Discover card and then pay off the entire credit card bill each month, my credit stays active and my credit score is always 800+.

I agree that the student loan should be paid off and then I would recommend that everyone should do something like I do with their bills, you are going to pay them anyway.
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Paying a credit card off in the same month the charge hits may not show up on your credit report how you intended... Depending on the frequency and timing of when the credit card company reports to the bureaus you may not have any "new" balance reported to the bureaus.

I work for a captive finance company for a luxury automaker, and we only report once per month -- that being the 6th business day of the month. In essence, an account could go past due or have credit marks applied on the 7th business day of the month, and as long as it was cleaned up before the 6th business day of the following month the bureaus (or customer) would not be impacted.

So in the scenario of charging a balance on a credit card only to pay it off in the same cycle may keep the account active, it won't demonstrate paid-as-agreed credit over a period of time....rather it will only show an open account with no revolving balance.
 
stevie-a said:
Paying a credit card off in the same month the charge hits may not show up on your credit report how you intended... Depending on the frequency and timing of when the credit card company reports to the bureaus you may not have any "new" balance reported to the bureaus.

I work for a captive finance company for a luxury automaker, and we only report once per month -- that being the 6th business day of the month. In essence, an account could go past due or have credit marks applied on the 7th business day of the month, and as long as it was cleaned up before the 6th business day of the following month the bureaus (or customer) would not be impacted.

So in the scenario of charging a balance on a credit card only to pay it off in the same cycle may keep the account active, it won't demonstrate paid-as-agreed credit over a period of time....rather it will only show an open account with no revolving balance.
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Thanks for that. I did not know that.


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Paid it off this morning! Debt free! At least until it's house time haha
 
SkiBumGolfer said:
Paid it off this morning! Debt free! At least until it's house time haha
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Congrats! I just need $900 more to go on my student loan. Cant wait to be in your shoes!

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stevie-a said:
Paying a credit card off in the same month the charge hits may not show up on your credit report how you intended... Depending on the frequency and timing of when the credit card company reports to the bureaus you may not have any "new" balance reported to the bureaus.

I work for a captive finance company for a luxury automaker, and we only report once per month -- that being the 6th business day of the month. In essence, an account could go past due or have credit marks applied on the 7th business day of the month, and as long as it was cleaned up before the 6th business day of the following month the bureaus (or customer) would not be impacted.

So in the scenario of charging a balance on a credit card only to pay it off in the same cycle may keep the account active, it won't demonstrate paid-as-agreed credit over a period of time....rather it will only show an open account with no revolving balance.
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Very well put and excellent information! Spot on!
 
capt.dru said:
Congrats! I just need $900 more to go on my student loan. Cant wait to be in your shoes!

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You're so close man! It feels great!
 
Certainly pay it off!! If you're using and paying off your credit cards each month you'll have nothing to worry about in regards to your credit being hurt.

I learned a lot from www.creditkarma.com in regards to how the different factors effect your credit score. They have advertisements and whatnot on the site, but it's free and gives you your credit score without hurting your credit. I've used it for 4-5 years now and have referred many who do the same.

Congrats on eliminating the loan debt! Working on doing the same myself!

SkiBumGolfer said:
Great info and thanks to everyone for the input! Sounds like I'll just put the final nail in and call it good. Will feel nice!

With regard to credit cards, I ALWAYS pay off my whole balance every month. So shouldn't have to worry about that too much.

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stevie-a said:
Paying a credit card off in the same month the charge hits may not show up on your credit report how you intended... Depending on the frequency and timing of when the credit card company reports to the bureaus you may not have any "new" balance reported to the bureaus.

I work for a captive finance company for a luxury automaker, and we only report once per month -- that being the 6th business day of the month. In essence, an account could go past due or have credit marks applied on the 7th business day of the month, and as long as it was cleaned up before the 6th business day of the following month the bureaus (or customer) would not be impacted.

So in the scenario of charging a balance on a credit card only to pay it off in the same cycle may keep the account active, it won't demonstrate paid-as-agreed credit over a period of time....rather it will only show an open account with no revolving balance.
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I did not know that Stevie, however I do know that my credit rating is extremely high with only that account and one car payment showing on my credit report. I get a free monthly update with the Discover account.
 
DawgDaddy said:
I did not know that Stevie, however I do know that my credit rating is extremely high with only that account and one car payment showing on my credit report. I get a free monthly update with the Discover account.
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I would assume you've had previous paid-as-agreed credit (mortgage, car/personal loan, etc.) that you've since paid off and most likely have been on the bureaus for quite some time. Don't take that as a shot at your age, rather I mean that to imply you didn't just recently open the credit card or car loan, and have had prior credit experience. This is known as your "report date". To relate this another way, equate this to how THP captures everyone's "Joined Date" or a member since XXXX date.

The biggest myth about credit scores I see is, people believe that having open lines with a balance is a good thing as long as you don't pay anything late. I'll agree with them about not paying late, but what gets overlooked is the number of open lines and the amount of debt being carried month after month. I'm talking primarily about credit cards, but loans can have the same affect too. Having several lines that are nearly maxed out (or have limited available credit) is a bad thing because it gives the impression you are 1 unforeseen major expense away from a credit disaster -- and the bureaus *WILL* penalize your score for this.

If you are reading this and that mirrors your credit situation the best thing you can do is focus on paying off 1 card at a time while paying the minimum on all the others. DO NOT close the line once you have it paid off, rather keep it open and DO NOT use it if at all possible. Your score will improve quickly and you'll be able to clear out revolving debt much quicker!
 
stevie-a said:
I would assume you've had previous paid-as-agreed credit (mortgage, car/personal loan, etc.) that you've since paid off and most likely have been on the bureaus for quite some time. Don't take that as a shot at your age, rather I mean that to imply you didn't just recently open the credit card or car loan, and have had prior credit experience. This is known as your "report date". To relate this another way, equate this to how THP captures everyone's "Joined Date" or a member since XXXX date.

The biggest myth about credit scores I see is, people believe that having open lines with a balance is a good thing as long as you don't pay anything late. I'll agree with them about not paying late, but what gets overlooked is the number of open lines and the amount of debt being carried month after month. I'm talking primarily about credit cards, but loans can have the same affect too. Having several lines that are nearly maxed out (or have limited available credit) is a bad thing because it gives the impression you are 1 unforeseen major expense away from a credit disaster -- and the bureaus *WILL* penalize your score for this.

If you are reading this and that mirrors your credit situation the best thing you can do is focus on paying off 1 card at a time while paying the minimum on all the others. DO NOT close the line once you have it paid off, rather keep it open and DO NOT use it if at all possible. Your score will improve quickly and you'll be able to clear out revolving debt much quicker!
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This brings up a question I've had and you seem rather knowledgeable. I have 3 credit cards, only 2 of which I use. However, the one I don't use has the longest credit history. Should I leave it active and just not use it to keep my utilization ratio down, or does an inactive card hurt my rating somehow?
 
SkiBumGolfer said:
This brings up a question I've had and you seem rather knowledgeable. I have 3 credit cards, only 2 of which I use. However, the one I don't use has the longest credit history. Should I leave it active and just not use it to keep my utilization ratio down, or does an inactive card hurt my rating somehow?
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If the one you inactivate is your oldest one then it will impact it as age of credit is a factor.

Depending on the variance the impact may be minimal
 
mikedean441 said:
If the one you inactivate is your oldest one then it will impact it as age of credit is a factor.

Depending on the variance the impact may be minimal
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Variance in age you mean? It's probably 2 years older than the next oldest card.
 
SkiBumGolfer said:
Variance in age you mean? It's probably 2 years older than the next oldest card.
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Correct.
Check out credit karma like derek suggested. It gives you the breakdown of all the categories, the ranges you fall in etc and lets you see the whole picture much easier
 
Pay it off, then pay all your other bills off. Don't buy anything you don't need until you owe nothing to anyone. Your pillow will feel much nicer at night. Delayed gratification will lead to a lifetime of plenty.
 
Oh good god. I've been paying on mine for I swear; a century.


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kortneyV said:
Oh good god. I've been paying on mine for I swear; a century.


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Any chance they'll be forgiven?
 
SkiBumGolfer said:
This brings up a question I've had and you seem rather knowledgeable. I have 3 credit cards, only 2 of which I use. However, the one I don't use has the longest credit history. Should I leave it active and just not use it to keep my utilization ratio down, or does an inactive card hurt my rating somehow?
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Yes absolutely. Never close a credit card if you don't have to. Having history of usable credit that you don't use along with the length it's been open is a good thing as long as it's not too high. So keep it open but drop the credit limit on it if possible. I have a card I never use I keep open but dropped to a $500 limit (the lowest they would allow) because I've had that card for a long time.
 
Oh and tomorrow is the final payment on a small undergrad loan i had...from 2000

Ill take my MBA loans to my grave
 
I'm so glad we were able to pay for my wife's college through her old job program and it of pocket.


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My fiance just got done in December for her masters so we got like 78k to pay off. I got big into Dave Ramsey so I no longer have credits and pay cash for everything. Only got that student loan my car and the mortgage and I'll be debt free :)
 
SkiBumGolfer said:
This brings up a question I've had and you seem rather knowledgeable. I have 3 credit cards, only 2 of which I use. However, the one I don't use has the longest credit history. Should I leave it active and just not use it to keep my utilization ratio down, or does an inactive card hurt my rating somehow?
Click to expand...

As others have also commented, do not close the credit card account with a $0 balance. Keep it open because it has longevity and a full line of credit available. The only way I would ever recommend closing a card is if you have solid credit with numerous credit qualifiers (i.e. multiple credit cards open for long periods of time and $0 or low balances; mortgage, car, personal loans that have been paid as agreed currently or in the past and then closed via payoff; as little revolving debt as possible).

If you only have 3 cards open and 1 has a $0 balance, you are in good shape....just continue to work on the other 2 open cards, possibly focusing on them 1 at a time to get them paid off quicker.
 
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