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WonderLady
LIF Infant
Member since 1/15 355 total posts
Name:
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Anyone know a lot about credit scores?
I have good credit. Not excellent. 725 score. I am looking for a house and a mtg sometime this year. I have 2 credit cards with a few thousand dollars owed and a car loan. No late payments. I have a student loan with 14k and 2 1/2 years left. Someone in my family has offered to pay up my loan. They would not give me the $ towards anything else, like the house- only for the loan. I read online that paying it off could actually negatively affect my credit bc it closes an on time installment loan. The article suggested paying off 75% to lower debt to income but keep the positive account. I called and asked about this but they said that even if I paid 75% in a lump sum, I would still owe the $600 monthly, but just for less months. So I'm not sure how that would actually affect my debt to income ratio for a mtg. Can anyone tell me if this is a good idea? I see conflicting things when I research it.
Eta a detail. It is technically 3 separate loans. 28 months, 20 months, and 20 months left. Each is 200 a month. Would it be a good idea to pay off the two 20 month ones and keep the 28 month one?
Message edited 7/28/2015 8:58:10 PM.
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Posted 7/28/15 8:21 PM  |
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Seawolf
LIF Adult
Member since 3/14 1336 total posts
Name:
Scrumba
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Anyone know a lot about credit scores?
I think Paramount is very knowledgable about this stuff!
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| Posted 7/28/15 8:36 PM |
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LuckyStar
LIF Adult
Member since 7/14 7274 total posts
Name:
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Anyone know a lot about credit scores?
I had a small student loan that I paid off and my score dropped quite a bit, though I only had a couple other lines of credit comprising my score. I'd probably go the 75% route, but I'm no financial expert.
Also, for the mortgage they ran DH and my scores and everything was based off the lower of the middle scores. In my case, I had the lower score and my middle was around where yours is. We had absolutely no issues getting the mortgage. As long as your income is good and debts aren't nuts, you'll be just fine with that score. Good luck!
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| Posted 7/28/15 8:41 PM |
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Michelle1110
My family is complete
Member since 1/12 2338 total posts
Name:
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Anyone know a lot about credit scores?
Ask a mortgage broker. Even if you're not ready to start looking. We did and are so thankful because she told us what to do with what accounts/loans, etc and it worked.
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| Posted 7/29/15 7:34 AM |
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Deeluvsvinny
DONE
Member since 10/08 4952 total posts
Name:
Whatever
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Anyone know a lot about credit scores?
725 is a good score and paying off a student loan will not increase that score.
A more important question is how much your monthly debt vs. your GROSS monthly income is.
I too, would recommend speaking with a mortgage professional- they can pull your credit and analyze your income and let you know if you qualify.
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| Posted 7/29/15 8:20 AM |
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WonderLady
LIF Infant
Member since 1/15 355 total posts
Name:
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Re: Anyone know a lot about credit scores?
Posted by LuckyStar
I had a small student loan that I paid off and my score dropped quite a bit, though I only had a couple other lines of credit comprising my score.
Thanks. This is what I'm afraid of.
My credit consists of a car loan, 2 credit cards, and these 3 school loans that comprise one loan, I think it was for each year of school.
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| Posted 7/29/15 9:33 AM |
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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Anyone know a lot about credit scores?
I wouldn't do anything until you actually apply for a mortgage and see if they are qualifying you for the best rates. Your credit score is borderline in this regard.
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| Posted 7/29/15 9:41 AM |
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Paramount
Sweet!
Member since 7/12 4289 total posts
Name:
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Re: Anyone know a lot about credit scores?
Posted by Seawolf
I think Paramount is very knowledgable about this stuff!
In general I am. (Thank you. Its only because I dug myself out of debt!)
I never had student loan debt so I CANT answer. I will always say "I don't know" if there is even a chance my advice can hurt.
Installment loans are "good" debt. They show you can pay something off etc. Car, mortgage.
When you get a mortgage the only thing the bank cares about is your debt to income ratio. How much debt do you have compared to your income.
I THINK they want less than 45%. And I THINK that's on the high side. So your debt each month (insurance, mortgage, taxes, power, cable, loans, credit cards) is divided by your taxes. If its over the percent they want, you will NOT get a loan.
I have NO idea how much your credit score could drop (or help) by paying off your loans. Your debt to income ration would be better (you would add 600 a month since your not paying that).
Paying off your credit cards wont harm your credit score, but DO NOT CLOSE THEM. Closing your credit cards WILL harm your credit. And it will help your debt/income ratio.
But I do not have advice for student loans and how it would effect your credit.
Message edited 7/29/2015 10:32:11 AM.
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| Posted 7/29/15 10:31 AM |
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WonderLady
LIF Infant
Member since 1/15 355 total posts
Name:
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Re: Anyone know a lot about credit scores?
Posted by ave1024
I wouldn't do anything until you actually apply for a mortgage and see if they are qualifying you for the best rates. Your credit score is borderline in this regard.
It's the borderline that makes me so nervous. I feel like "one wrong move", kwim?
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| Posted 7/29/15 2:11 PM |
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WonderLady
LIF Infant
Member since 1/15 355 total posts
Name:
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Re: Anyone know a lot about credit scores?
Posted by Paramount
Posted by Seawolf
I think Paramount is very knowledgable about this stuff!
In general I am. (Thank you. Its only because I dug myself out of debt!)
I never had student loan debt so I CANT answer. I will always say "I don't know" if there is even a chance my advice can hurt.
Installment loans are "good" debt. They show you can pay something off etc. Car, mortgage.
When you get a mortgage the only thing the bank cares about is your debt to income ratio. How much debt do you have compared to your income.
I THINK they want less than 45%. And I THINK that's on the high side. So your debt each month (insurance, mortgage, taxes, power, cable, loans, credit cards) is divided by your taxes. If its over the percent they want, you will NOT get a loan.
I have NO idea how much your credit score could drop (or help) by paying off your loans. Your debt to income ration would be better (you would add 600 a month since your not paying that).
Paying off your credit cards wont harm your credit score, but DO NOT CLOSE THEM. Closing your credit cards WILL harm your credit. And it will help your debt/income ratio.
But I do not have advice for student loans and how it would effect your credit.
Thx for your thoughts. It's so complicated, lol
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| Posted 7/29/15 2:11 PM |
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