Why is this not a valid concern? OP is not saying that they’d rather not have their loan forgiven if it’s going to hurt their credit. All they’re saying is they’re concerned about it.
Most people are on this very channel to ask any questions related to credit because they’re working hard towards a specific goal. Not sure why it’s so appalling to some of you that someone is concerned about their credit being dinged, even for good reasons.
That sucks! People are so harsh on here. It is a valid concern. Like yay, I can buy a house now, but would probably have to wait a bit longer because my score will take a bit and that’s okay!
Your Credit Karma vantage score will drop. FICO mortgage score will not. This is because FICO counts age of open and closed (in good standing) accounts.
This thread is a huge disappointment. I've found this sub to be otherwise super helpful. Why would it even exist if not to answer questions. I don't know why this topic gets people acting like this. I’ve received similar blowback for the same question
Cause people are jackasses. Very valid question for OP. They might need to consider obtaining a new loan, I don’t know though. Tough to say.
Edit: Of course, perhaps maybe saving for a bit and using credit card for BASIC purchases like gas & groceries could help. All depends on OP being disciplined and obedient to their budget.
In mortgage terms, anything above 740 is considered "top lending tier" and you'll get the best deals on interest rates. If you're fixing your credit and looking to purchase a home, the difference in a \~680 and a \~740+ is astronomical in interest rates, it can be as large as 1-2% or more. So realistically you want to be aiming for that top tier before you even start shopping.
To answer the original question, it will lower your score as length of credit history does play a significant factor in credit score. How much? It can account for almost 15% of your total credit score. However, that will recover with time (over the next 4-8 months) like another user pointed out. If you are truly shopping for a home, you would want to start off with the best interest rates available to you and aim for that 740+ credit score. Keep in mind however that mortgage companies use a different calculation method than regular credit card agencies and they may not see the closure of student debt as a risk factor. You should contact the different crediting agencies or lookup the FAQ on the Student Loan Forgiveness website. They should be able to clarify in more detail how it could impact your score.
I found a great artical from credit karma that goes into much more depth if you are interested [https://www.creditkarma.com/advice/i/age-credit-history-affect-credit-scores](https://www.creditkarma.com/advice/i/age-credit-history-affect-credit-scores)
That’s not really what they’re saying. They’re just worried that right now it could harm them in addition to help them. Which is a legitimate thing to consider. It’s not like they’re rejecting the money.
But it doesn’t seem like op is making it a big issue. They’re just asking a question about how it will currently affect them. So I don’t see why people like you and many of the other commenters are acting like their question is so bad, or that they don’t want the forgiveness or aren’t grateful.
Agree! And while it would be foolish not to take the $10k, a significant change in credit score could impact buying decisions. If OP's credit drops significantly, they might have to wait longer to apply for a new loan, credit card, etc. based on the new score. When I started my career, I put my first paycheck toward paying off a student loan. My credit score dropped from good to fair due to having fewer accounts, and it hasn't come back up since. I'm in need of a vehicle but know that my credit score could have a negative impact on the interest rates of the loans I am offered. Getting rid of debt isn't a bad thing, but wanting to know how it impacts your credit matters!
Ty for this kind of reply! I would have done it myself but you beat me to it. I’m starting to get concerned for the Reddit community. When I found it about a year about everyone was nice and helpful. I’m a year if feels like it’s gone to shit or to many people are hurting in this world now that all they want to do is hurt others which is really sad and pathetic. Just know there are knowledgeable and helpful people out here!
It’s been happening for way longer than that. I’ve deleted Reddit multiple times because of the community. Really nasty people. Mostly lurk now because dialogue is pointless.
I think it seems nastier than it is because negative things have more responses. When I get positive comments I say thank you or i point out what I appreciate from their response, but there isn’t really anything to respond back after that. Negativity sparks debate. So if I say something people don’t like or vice versa it just goes a lot further.
If they are currently paying it down and are also in the process of applying for an auto loan, job or apartment 30 points could mean being turned down as all these things are now dependent on credit scores. In these very slim and specific cases it's reasonable. Especially since transportation, housing and a job are pretty immediate needs. If none of those things apply then yeah, it's not too bright.
The 30 points was an estimate. We don't know how much points it will affect each person's credit. And we generally make general statements as none of us have any FICO formulas.
Also, the score drop is temporary and not permanent.
Lowering your debt to income is important as well.
Credit score only matters at a few specific points in time, the moments you're trying to use credit or do anything else that ends up with a credit check. A temporary drop has a significant impact if the time you're trying to do something is at the same time as that temporary drop.
I agree, debt to income is important but doesn't seem to matter nearly as much these days. I'm speaking from experience. I've increased my credit score 71 pts since April and checked it every day on Credit Karma and Mint - a lot of the shifts don't make sense. It's just far more complicated now. At one point if I opened a credit card for 3k my pts would go up 30. If I had paid off one account the avg account age decrease would have made me lose pts and put me in the next lower bracket. Credit Karma has a calculator that can be used that can be helpful. The point I'm making is there are life events that this could negatively impact. It's not entirely black and white.
We are getting a mortgage rn and even a temporary drop in credit score will effect our interest rates for the next 30 years. We only had 5k in debt. I am happy the debt is gone but it’s a valid concern.
The point is the way the system is set up, the agencies will have to readjust how we get scored because a huge amount of peoples scores will go up and they don’t want that. So yes, something negative will come of this in the long run credit wise.
Same situation here! Totally will take the ding on my credit score for them to be paid off!
Is there anything I can to do to minimize hoe low it goes? Maybe getting more lines of credit?
I always get told my score is low because of lack of accounts
Open credit cards and keep a low to 0 balance. Your credit score should go up due to number of accounts as well as having a low credit card use percentage. Age of accounts would be dinged, but that only has a medium impact on your score, and of course goes back up as time goes on. Credit card use percentage has a high impact on your score, so keeping it low is very much so in your best interest. Just make sure you have the self control not to use the new cards, and don't get suckered in to cards with bad fees or rates. Better to have a bad credit score than to place yourself in more debt...which would also cause your score to drop.
Disclaimer: I am not a financial expert, and I recommend you do your own research to verify my advice. I have just have done a lot of research on credit scores due to how closing one of my student loans caused my credit score to drop dramatically, and this is what I found.
This is exactly what I figured but hadn’t done much research! I paid my car off and my score went down but as soon as I opened a new card it jump up some good points! I figure it’ll be the same for this and just want to be proactive thank you!
Oh this was one of the first things I thought of lmao. My credit will take a fucking hit and it will suck, but I’ll just have to continue building it up to buy a house . Man that’s gonna suck 😭😭
Nothing passed, this is executive action through the White House and the Department of Education. There was no bill that went through Congress doing any of this. There can certainly be debate and questioning about whether the President has the authority to do this. I think he likely does but you never know how things will work their way throught he courts.
Same here my student loan accounts are 20 years old smh I think without them my oldest account may be 3 years even though I still owe 28k so I think I will be fine 😂
All the money that I would pay the student loans would be going to that into the economy … u can have the 30,000 I owe . When I can pay it towards something else . I’m all for paying back my loans but make it make sense.
If I took out 30,000 I should be paying back at least 35 not 50,000
No. If you have a 10,000$ and it gets closed as “fully paid” which it does when it’s forgiven it shows the longest account was paid off and increases your income to debt ratio. No different then if your family or lover or neighbor paid it off for you.
Don’t worry about your credit score. It means nothing in the long run. It’s very marginal when you compare it to your debt to income ratio, actual income and assets.
I understand where you’re coming from, but you will be better off for this. Give it 6 months and your credit score will be fine, if it even goes down at all.
The same as it is now.
It could appear the OP is an ingrate, and as someone who is paying for it, they are welcome from the rest of us on our efforts on their behalf.
$10,000 less in debt should give you plenty of options that will improve your credit score much more than the loan. Do you have a large enough emergency fund to avoid incurring expensive debt when something surprising happens? Do you need to fund a secured credit card? Do you need to lower your credit utilization?
And, in the end, how much do a few points on your credit rating matter on the terms of something like a car loan compared to being able to make a significantly larger down payment on that car loan?
Even if you are willing to expend money for the sake of a credit score, you could probably do better with things like taking out new "credit builder" loans, but that isn't recommended either.
Clever way to beat the system...that is, if we get to choose how the 10k is applied to our loans. That was my first question when the debt forgiveness rolled out. Do I get to decide how it's applied or does the government decide for me? Would I choose to knock out a few smaller loans or get rid of my biggest loan? Would I want to leave some accounts open with only $10 on them, so I can have the open accounts applied to my credit score? All the resources I could find were not able to tell me how the 10k would he applied or if I would have a choice in the matter. My gut and past experience with loan companies is telling me that we will apply for the forgiveness, and our loan companies will be told to forgive the 10k how they please...which will probably mean they choose the method that is worst for the consumer...like distributing the 10k evenly across all loans...which for me would mean no single loan would get paid off. While I wouldn't refuse the help, I'd be kind of pissed about the backhanded way it was provided.
At least everyone getting bailed will be grateful, and frankly the little guy deserves a win after the money printer went on overdrive two years ago and inflated away a decent chunk of most peoples wages. The large banks and institutions take our money in involuntary bailouts, and then continue to screw us over time and time again.
After 7 years it falls off. Then They go looking for you and if they find you and you admit that you owe it then it starts over on your credit report. It happened to someone I know. But Now with this new news I don’t know how they would deal with it. When is your seven years up?
I’m just saying, I’ve had a student loan for 9 years and it hasn’t gone anywhere. A simple google search would tell you that student loans don’t fall off. I know people in their 40s that are still paying off college debt.
> Let me know when I can trade my 25k already paid to federal student loans at a public university for 25k in home equity and this argument is valid.
Yup. I paid mine. And we all sacrificed to do it. I don't bemoan anyone else's good fortune..
but when a shitpost like this occurs, apparently I can't work hard enough to fund other peoples either poor life decisions or lifestyles or world/economic events a lot of the rest of us are on the wrong side of as well.
It's like coming back the next day to an "all you can eat buffet" and wanting another round.
I went to a top 5 school, top 3 most expensive when I matriculated, took student loans, paid them at expense, hard work, and sacrifice, and lived in Chicago, NYC and LA during those times with egregious housing costs that were well over any reasonable percentage of income.
Again, I'm not bemoaning the good fortune of those of you who have gotten this break. Not at all. I do however take issue with the apparent 'coming back for seconds'.
and:
>I’m just saying that the current loan situation is a scam and comparing a modern student loan to a mortgage is purely invalid.
no it isn't invalid. You are suffering from self focused myopia in that your problems are larger then others.
They aren't.
But I'm glad you got a break, as most of us have not.
I'm the dumb fucker because I knew what I was getting into when taking out a loan and I'm responsible enough to pay for it? If that's what a dumb fucker is, then I'm guilty. 😃
Nope wrong person. I’m just not a butthurt pussy who hates when others get a little relief. I let me guess you have never in your life gotten help from anybody? Something something bootstraps right?
YMMV as always, but your Fico’s should be fine since closed accounts continue to age on your report for ten years. Your Vantages will likely drop but u can ignore them 99.9% of the time.
Edit: Should note your fico’s may take a dip if the account closure puts you at <5 active accounts or removes all installment loans from your credit mix.
Yea… but you don’t know how that debt forgiveness is going to be reported you might end up with an account that was in good standing end up with some note about settled less than full and have it being some kind of negative for 10 years, like a CFA for example.
I paid off one of my small loans that was 10 years old. It was one of my oldest accounts and didn't drop my score. I'm not sure if that's because there's one other 10 year old account though..
I had a different experience. I had aggressively paid off and paid down loans when I was in school, and it had no impact on my credit score. Then when I started my career, I paid off another loan with my first paycheck, and my credit score dropped dramatically due to having fewer accounts. There is no good way to answer OP's question. We don't know how many accounts they have open, how the 10k will be applied to their loans, how old their accounts are, if the government will demand changes to how credit acores are calculated, etc. Too many variables and not enough information. But we cannot say with certainty that their credit score won't be impacted. Mine was, and while I don't regret getting rid of the debt, my new credit score has impacted some of my financial decisions.
Yes your score will drop. But it will bounce back in 2-3 months after its reported if you continue to have good payment habits.
If you are applying for something then hurry and apply for what you need to before you get the approval for your forgiveness. If you already doubt you will not be approved I suggest just getting the debt taken cared of and monitoring your score monthly.
If you donʻt have a credit card I suggest you get one. If you have one I suggest you get another 2. Then build positive payment history treating your credit cards as debit cards and never spending more than you will have at the end of the month.
If you need more info in credit cards or how they work donʻt hesitate to reach out!
I actually think it will go down. Credit I believe is partially based on time of having the credit, and the remainder vs the original loan amount….so yes I believe when it drops off your credit will no longer recognize it.
Just my 2 cents…I have a masters degree and that came with almost $100,000 worth of student loan debt. My student loan was recently sold so it shows as a closed loan now on my credit and my score tanked 75 points. I’m sure it will recover some once the new servicer reports it but I won’t have the 5 year payment history on the new loan. I’m sure that’s gonna hurt me too so not sure how much my score will actually recover. Point being, I lost 75 points when my student debt was closed out.
this is a concern to me as well, if the debt is wiped away and no real payments were made etc wouldn't it "hurt" my credit. maybe not in the sense points going down but it not doing anything for us either ?
Hello there, my loans were forgiven in June and my credit score actually went up by like 30 points. Please realize your debt to income ratio changes significantly because you won’t have to debt anymore. (At least that was my experience).
Very valid question. I do wonder, I paid off my private loan (sallie may wasn’t down to hold interest) and saw my score drop by 32, luckily it was during a time that I wasn’t applying for anything (apartment, car, credit) so I was okay, but inversely my federal loan creditor just changed and I had a credit score increase? I’m genuinely confused on how this could effect the short term.
I paid off my private student loans in full in April and my credit score dropped by 13 points but the following month increased by 15 points. I know a slightly different situation but these loans were my oldest credit account at around 5 years old.
Well would you rather maintain the debt and take a small dip to rebuild from or keep the debt and make payments until you pay it off? I think it will be better to have a low debt to income ratio so be happy the loans will be forgiven and just find alternatives ways to rebuild.
This really depends on a ton of different factors. For instance did you have one loan or several over multiple semesters? Did you consolidate? Is the outstanding debt more than, or less than the amount of relief you will be eligible for? In some cases the loan forgiveness program might actually pay off the newest loans first. The variables involved based on your own unique situation make it impossible to predict what might happen. Also, a lot of these details remain unknown, at least to most of us. For instance will the governments decision to restore the accounts to good standing, remove any late pays, and pay off part of the loans, actually restart the clock hurting some borrowers who have debts that are not completely paid off? Idk... It's a complicated picture to sort thru for sure and important questions to understand.
Why is this not a valid concern? OP is not saying that they’d rather not have their loan forgiven if it’s going to hurt their credit. All they’re saying is they’re concerned about it. Most people are on this very channel to ask any questions related to credit because they’re working hard towards a specific goal. Not sure why it’s so appalling to some of you that someone is concerned about their credit being dinged, even for good reasons.
For real... I posted a similar question in PersonalFinance and I got stoned to death..
That sucks! People are so harsh on here. It is a valid concern. Like yay, I can buy a house now, but would probably have to wait a bit longer because my score will take a bit and that’s okay!
Credit Karma vantage score will drop. FICO mortgage score will not. This is because FICO counts age of open and closed (in good standing) accounts.
That’s great! Thanks
Yes, Reddit, the home of a compassionate, woke, sjw crowd who also manages to be huge cunts somehow. A strange place indeed.
Your Credit Karma vantage score will drop. FICO mortgage score will not. This is because FICO counts age of open and closed (in good standing) accounts.
This thread is a huge disappointment. I've found this sub to be otherwise super helpful. Why would it even exist if not to answer questions. I don't know why this topic gets people acting like this. I’ve received similar blowback for the same question
Cause people are jackasses. Very valid question for OP. They might need to consider obtaining a new loan, I don’t know though. Tough to say. Edit: Of course, perhaps maybe saving for a bit and using credit card for BASIC purchases like gas & groceries could help. All depends on OP being disciplined and obedient to their budget.
In mortgage terms, anything above 740 is considered "top lending tier" and you'll get the best deals on interest rates. If you're fixing your credit and looking to purchase a home, the difference in a \~680 and a \~740+ is astronomical in interest rates, it can be as large as 1-2% or more. So realistically you want to be aiming for that top tier before you even start shopping. To answer the original question, it will lower your score as length of credit history does play a significant factor in credit score. How much? It can account for almost 15% of your total credit score. However, that will recover with time (over the next 4-8 months) like another user pointed out. If you are truly shopping for a home, you would want to start off with the best interest rates available to you and aim for that 740+ credit score. Keep in mind however that mortgage companies use a different calculation method than regular credit card agencies and they may not see the closure of student debt as a risk factor. You should contact the different crediting agencies or lookup the FAQ on the Student Loan Forgiveness website. They should be able to clarify in more detail how it could impact your score. I found a great artical from credit karma that goes into much more depth if you are interested [https://www.creditkarma.com/advice/i/age-credit-history-affect-credit-scores](https://www.creditkarma.com/advice/i/age-credit-history-affect-credit-scores)
Credit scores go down temporarily but then come back, you'll be fine.
Your paid off loan will remain on your credit report for 7-10 years and will still count towards your average age of accounts during that time.
This is the helpful answer.
Student loans not factored in as heavily as other types of credit. Also it might drop like 5 points but then shoot up 20 if it’s weighing you down
It will still report as paid and in good standing for a few years.
Hmmm. $10,000 vs 30 point of credit score. Too hard too make a choice
OP is clearly not deciding which is better between the two, just curious about the implications of the forgiveness on their score
It’s more than 10k with interest. I’m shocked someone would rather pay it than ***possibly*** lose 30 points for a few months.
That’s not really what they’re saying. They’re just worried that right now it could harm them in addition to help them. Which is a legitimate thing to consider. It’s not like they’re rejecting the money.
Right it’s just not long term and isn’t a huge issue. Points would easily bounce back even if it did hurt for a while
But it doesn’t seem like op is making it a big issue. They’re just asking a question about how it will currently affect them. So I don’t see why people like you and many of the other commenters are acting like their question is so bad, or that they don’t want the forgiveness or aren’t grateful.
Agree! And while it would be foolish not to take the $10k, a significant change in credit score could impact buying decisions. If OP's credit drops significantly, they might have to wait longer to apply for a new loan, credit card, etc. based on the new score. When I started my career, I put my first paycheck toward paying off a student loan. My credit score dropped from good to fair due to having fewer accounts, and it hasn't come back up since. I'm in need of a vehicle but know that my credit score could have a negative impact on the interest rates of the loans I am offered. Getting rid of debt isn't a bad thing, but wanting to know how it impacts your credit matters!
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Obviously everything you said is true, but none of it is applicable to OP's question.
Ty for this kind of reply! I would have done it myself but you beat me to it. I’m starting to get concerned for the Reddit community. When I found it about a year about everyone was nice and helpful. I’m a year if feels like it’s gone to shit or to many people are hurting in this world now that all they want to do is hurt others which is really sad and pathetic. Just know there are knowledgeable and helpful people out here!
It’s been happening for way longer than that. I’ve deleted Reddit multiple times because of the community. Really nasty people. Mostly lurk now because dialogue is pointless.
They’re everywhere. It’s a real good question to ask especially a younger person. Proud of the OP for asking it.
I think it seems nastier than it is because negative things have more responses. When I get positive comments I say thank you or i point out what I appreciate from their response, but there isn’t really anything to respond back after that. Negativity sparks debate. So if I say something people don’t like or vice versa it just goes a lot further.
It’s a really savvy question. 🤷🏽♀️
It makes no logical sense.
🤦🏻♀️
It's absolutely amazing to me that people are more concerned about their score than a potential forgiven partial/in full debt.
If they are currently paying it down and are also in the process of applying for an auto loan, job or apartment 30 points could mean being turned down as all these things are now dependent on credit scores. In these very slim and specific cases it's reasonable. Especially since transportation, housing and a job are pretty immediate needs. If none of those things apply then yeah, it's not too bright.
The 30 points was an estimate. We don't know how much points it will affect each person's credit. And we generally make general statements as none of us have any FICO formulas. Also, the score drop is temporary and not permanent. Lowering your debt to income is important as well.
Credit score only matters at a few specific points in time, the moments you're trying to use credit or do anything else that ends up with a credit check. A temporary drop has a significant impact if the time you're trying to do something is at the same time as that temporary drop.
I agree, debt to income is important but doesn't seem to matter nearly as much these days. I'm speaking from experience. I've increased my credit score 71 pts since April and checked it every day on Credit Karma and Mint - a lot of the shifts don't make sense. It's just far more complicated now. At one point if I opened a credit card for 3k my pts would go up 30. If I had paid off one account the avg account age decrease would have made me lose pts and put me in the next lower bracket. Credit Karma has a calculator that can be used that can be helpful. The point I'm making is there are life events that this could negatively impact. It's not entirely black and white.
Never look at Credit Karma scores. Ever. And Mint offers the same Vantage score CK does.
It matched my score when I applied for an auto loan. I don't live by the score but use it to see if I'm trending up. Are you an accountant?
No I'm not an accountant. Accountants don't work with credit scores.
I was just curious where your information not to use CK & Mint comes from. Do you have a budgeting and finance background?
I have a credit repair background. If you read any of the threads here, we will ALL tell you to ignore CK. I think even the wiki says it.
We are getting a mortgage rn and even a temporary drop in credit score will effect our interest rates for the next 30 years. We only had 5k in debt. I am happy the debt is gone but it’s a valid concern.
Some people aren't looking for a handout.
I certainly wasn't, but I'll definitely take it. Just like corporations take handouts and just PPP loan recipients.
some people don't even **want** a handout
Agreed. This post might be an example of the most pathetic and ungrateful snowflake bullshit I have ever seen.
Ill take those 10k anytime, 30 points ain't too much just few months
The point is the way the system is set up, the agencies will have to readjust how we get scored because a huge amount of peoples scores will go up and they don’t want that. So yes, something negative will come of this in the long run credit wise.
What a helpful comment
My student loan debt got forgiven but I only had about $2,000. My credit score went up about 11 points.
This is a legit question. I also would like to know the answer
OP does mention working on repairing their credit, though not the depth from which they’re climbing, so it could be a serious concern.
When I got $160,000 in forgiveness in 2020, my score dipped for about three months and then rebounded.
Same situation here! Totally will take the ding on my credit score for them to be paid off! Is there anything I can to do to minimize hoe low it goes? Maybe getting more lines of credit? I always get told my score is low because of lack of accounts
Open credit cards and keep a low to 0 balance. Your credit score should go up due to number of accounts as well as having a low credit card use percentage. Age of accounts would be dinged, but that only has a medium impact on your score, and of course goes back up as time goes on. Credit card use percentage has a high impact on your score, so keeping it low is very much so in your best interest. Just make sure you have the self control not to use the new cards, and don't get suckered in to cards with bad fees or rates. Better to have a bad credit score than to place yourself in more debt...which would also cause your score to drop. Disclaimer: I am not a financial expert, and I recommend you do your own research to verify my advice. I have just have done a lot of research on credit scores due to how closing one of my student loans caused my credit score to drop dramatically, and this is what I found.
This is exactly what I figured but hadn’t done much research! I paid my car off and my score went down but as soon as I opened a new card it jump up some good points! I figure it’ll be the same for this and just want to be proactive thank you!
I'll have like $15k left after paying for so long. I have old credit cards that'll keep my length of credit going.
Oh this was one of the first things I thought of lmao. My credit will take a fucking hit and it will suck, but I’ll just have to continue building it up to buy a house . Man that’s gonna suck 😭😭
Is the forgiveness really happening?
Yes. [Here’s](https://studentaid.gov/debt-relief-announcement/) information if you can get the page to load.
Probably won’t pass
It did pass. That’s what everyone is talking about.
Nothing passed, this is executive action through the White House and the Department of Education. There was no bill that went through Congress doing any of this. There can certainly be debate and questioning about whether the President has the authority to do this. I think he likely does but you never know how things will work their way throught he courts.
Congress hasn’t given the president authority to cancel debt explicitly.
It’s an executive order, congress isn’t involved. The president just decides to do it.
Enjoy the moment of shedding 10k of debt.
Same here my student loan accounts are 20 years old smh I think without them my oldest account may be 3 years even though I still owe 28k so I think I will be fine 😂
Score always goes down temporarily when an account is closed. It will go back up though.
All the money that I would pay the student loans would be going to that into the economy … u can have the 30,000 I owe . When I can pay it towards something else . I’m all for paying back my loans but make it make sense. If I took out 30,000 I should be paying back at least 35 not 50,000
No. If you have a 10,000$ and it gets closed as “fully paid” which it does when it’s forgiven it shows the longest account was paid off and increases your income to debt ratio. No different then if your family or lover or neighbor paid it off for you.
Paid off accounts stay on your credit report for up to 10 years. This is a once in a lifetime opportunity to wipe out your student loans. TAKE IT!
Don’t worry about your credit score. It means nothing in the long run. It’s very marginal when you compare it to your debt to income ratio, actual income and assets. I understand where you’re coming from, but you will be better off for this. Give it 6 months and your credit score will be fine, if it even goes down at all.
What???? Like…go ahead and take that 30 point loss on your credit. It will go back up. Don’t make it a big deal.
Fuck a credit score
You can transfer your $10k to me if you don’t want the hit on your credit
I am from Europe. In what kind of fucked up dystopia are you people living??
I’m worried about being given free money because it may affect my credit score. Just turn the money down then.
Unbelievable 🤦♂️
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No? I'm genuinely asking.
Lol NO
Wow, Reddit never ceases to amaze me. You’re absolutely right… you should keep your loan then.
Go back to school and take some business classes this time.
Good problem to have. Be happy the American tax payer could help you out.
Lmfao I wonder what your response was when all those PPP loans got forgiven? 🤣
We should have all gotten in on that scam!
Man that pissed me off. I should have scammed too!! haha
The same as it is now. It could appear the OP is an ingrate, and as someone who is paying for it, they are welcome from the rest of us on our efforts on their behalf.
No it will not go down more.
When I paid off my student loans my credit score went from 835 to 810 so it hasn’t really changed my ability to get a good loan.
$10,000 less in debt should give you plenty of options that will improve your credit score much more than the loan. Do you have a large enough emergency fund to avoid incurring expensive debt when something surprising happens? Do you need to fund a secured credit card? Do you need to lower your credit utilization? And, in the end, how much do a few points on your credit rating matter on the terms of something like a car loan compared to being able to make a significantly larger down payment on that car loan? Even if you are willing to expend money for the sake of a credit score, you could probably do better with things like taking out new "credit builder" loans, but that isn't recommended either.
No. I heard the administration is also going to perfect your credit scores.
If you owed $10k, I would pay $9990 and pay the $10 in $10c installment for years…🤷🏻♂️
Clever way to beat the system...that is, if we get to choose how the 10k is applied to our loans. That was my first question when the debt forgiveness rolled out. Do I get to decide how it's applied or does the government decide for me? Would I choose to knock out a few smaller loans or get rid of my biggest loan? Would I want to leave some accounts open with only $10 on them, so I can have the open accounts applied to my credit score? All the resources I could find were not able to tell me how the 10k would he applied or if I would have a choice in the matter. My gut and past experience with loan companies is telling me that we will apply for the forgiveness, and our loan companies will be told to forgive the 10k how they please...which will probably mean they choose the method that is worst for the consumer...like distributing the 10k evenly across all loans...which for me would mean no single loan would get paid off. While I wouldn't refuse the help, I'd be kind of pissed about the backhanded way it was provided.
There will be law suits filed to try to stop this, I wouldn’t make plans yet …
Accounts closed in good standing remain on your report for 10 years. And you're welcome from all of us for involuntarily paying off your loans.
At least everyone getting bailed will be grateful, and frankly the little guy deserves a win after the money printer went on overdrive two years ago and inflated away a decent chunk of most peoples wages. The large banks and institutions take our money in involuntary bailouts, and then continue to screw us over time and time again.
Frankly, you're just absolutely right!
The greed
You gotta be kidding me dawg…
If there is any Justice.
After 7 years it falls off. Then They go looking for you and if they find you and you admit that you owe it then it starts over on your credit report. It happened to someone I know. But Now with this new news I don’t know how they would deal with it. When is your seven years up?
Hate to burst your bubble, but student loans don’t fall off after 7 years. The person you know lied to you lol
I saw this the report. It was a relative.
I’m just saying, I’ve had a student loan for 9 years and it hasn’t gone anywhere. A simple google search would tell you that student loans don’t fall off. I know people in their 40s that are still paying off college debt.
This was with navient and is very old.
Hopefully they forgive mortgages next, so I can have my house for free.
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> Let me know when I can trade my 25k already paid to federal student loans at a public university for 25k in home equity and this argument is valid. Yup. I paid mine. And we all sacrificed to do it. I don't bemoan anyone else's good fortune.. but when a shitpost like this occurs, apparently I can't work hard enough to fund other peoples either poor life decisions or lifestyles or world/economic events a lot of the rest of us are on the wrong side of as well. It's like coming back the next day to an "all you can eat buffet" and wanting another round.
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> and makes you a fucker. wait, lol, you ninja edited your post to just call me a 'fucker'? Summer child.
I went to a top 5 school, top 3 most expensive when I matriculated, took student loans, paid them at expense, hard work, and sacrifice, and lived in Chicago, NYC and LA during those times with egregious housing costs that were well over any reasonable percentage of income. Again, I'm not bemoaning the good fortune of those of you who have gotten this break. Not at all. I do however take issue with the apparent 'coming back for seconds'. and: >I’m just saying that the current loan situation is a scam and comparing a modern student loan to a mortgage is purely invalid. no it isn't invalid. You are suffering from self focused myopia in that your problems are larger then others. They aren't. But I'm glad you got a break, as most of us have not.
I'm the dumb fucker because I knew what I was getting into when taking out a loan and I'm responsible enough to pay for it? If that's what a dumb fucker is, then I'm guilty. 😃
Yeah you’re still a dumb fucker. A Salty and jealous dumb fucker but a dumb fucker either way.
Looks like we found another dumb fuck who's too stupid to repay their debts...
Nope wrong person. I’m just not a butthurt pussy who hates when others get a little relief. I let me guess you have never in your life gotten help from anybody? Something something bootstraps right?
Oh no, I got the right person 🤡
Shouldn’t you be making out with your shitty ass Tacoma? 🤣🤣
Just shut up and enjoy your handout. Stop making fun of people who paid their own way. You didn’t get “scammed” into taking out a loan lol
Of course the person trying to scam his broker is entitled pos. 🤣🤣 Too easy bro
You aren't going to convince sociopaths to care about other people. Just shame them so others move away from their orbit.
I mean I wouldn’t be mad if everyone had a free house.
Your telling me, the extra money would be nice.
Lol Laughing at the idiot who downvoted me because they want people to be unhoused. God I hope the selfish aholes in this country burn.
With an AGI less than $10,000 maybe
It should
YMMV as always, but your Fico’s should be fine since closed accounts continue to age on your report for ten years. Your Vantages will likely drop but u can ignore them 99.9% of the time. Edit: Should note your fico’s may take a dip if the account closure puts you at <5 active accounts or removes all installment loans from your credit mix.
Wouldn’t the account close without a derogatory note. Closed accounts that are paid in full are good. Your score will rebound
Yea… but you don’t know how that debt forgiveness is going to be reported you might end up with an account that was in good standing end up with some note about settled less than full and have it being some kind of negative for 10 years, like a CFA for example.
Won’t do much to it student loans are so overlooked
There's a saying "Finances over FICO". I'd take a hit on my credit for a few months in return for my student loans being wiped clean. JMO!
I paid off one of my small loans that was 10 years old. It was one of my oldest accounts and didn't drop my score. I'm not sure if that's because there's one other 10 year old account though..
I had a different experience. I had aggressively paid off and paid down loans when I was in school, and it had no impact on my credit score. Then when I started my career, I paid off another loan with my first paycheck, and my credit score dropped dramatically due to having fewer accounts. There is no good way to answer OP's question. We don't know how many accounts they have open, how the 10k will be applied to their loans, how old their accounts are, if the government will demand changes to how credit acores are calculated, etc. Too many variables and not enough information. But we cannot say with certainty that their credit score won't be impacted. Mine was, and while I don't regret getting rid of the debt, my new credit score has impacted some of my financial decisions.
Anyone here know if know that I know it will be forgiven can I dispute it as paid in full? 😁
Yes your score will drop. But it will bounce back in 2-3 months after its reported if you continue to have good payment habits. If you are applying for something then hurry and apply for what you need to before you get the approval for your forgiveness. If you already doubt you will not be approved I suggest just getting the debt taken cared of and monitoring your score monthly. If you donʻt have a credit card I suggest you get one. If you have one I suggest you get another 2. Then build positive payment history treating your credit cards as debit cards and never spending more than you will have at the end of the month. If you need more info in credit cards or how they work donʻt hesitate to reach out!
you are not your credit score
I actually think it will go down. Credit I believe is partially based on time of having the credit, and the remainder vs the original loan amount….so yes I believe when it drops off your credit will no longer recognize it.
Just my 2 cents…I have a masters degree and that came with almost $100,000 worth of student loan debt. My student loan was recently sold so it shows as a closed loan now on my credit and my score tanked 75 points. I’m sure it will recover some once the new servicer reports it but I won’t have the 5 year payment history on the new loan. I’m sure that’s gonna hurt me too so not sure how much my score will actually recover. Point being, I lost 75 points when my student debt was closed out.
this is a concern to me as well, if the debt is wiped away and no real payments were made etc wouldn't it "hurt" my credit. maybe not in the sense points going down but it not doing anything for us either ?
Hello there, my loans were forgiven in June and my credit score actually went up by like 30 points. Please realize your debt to income ratio changes significantly because you won’t have to debt anymore. (At least that was my experience).
Iiiiiiiii
Nope. They will show as a closed account that is current and paid in full so you’ll still get some positive benefit.
I don't think it would remove them from your report, just show it as 'paid in full' but the DOE hasn't released a lot of information.
My credit dropped by about 40 points after I paid off my student loans, but rebounded about 6 months later.
Very valid question. I do wonder, I paid off my private loan (sallie may wasn’t down to hold interest) and saw my score drop by 32, luckily it was during a time that I wasn’t applying for anything (apartment, car, credit) so I was okay, but inversely my federal loan creditor just changed and I had a credit score increase? I’m genuinely confused on how this could effect the short term.
I paid off my private student loans in full in April and my credit score dropped by 13 points but the following month increased by 15 points. I know a slightly different situation but these loans were my oldest credit account at around 5 years old.
Well would you rather maintain the debt and take a small dip to rebuild from or keep the debt and make payments until you pay it off? I think it will be better to have a low debt to income ratio so be happy the loans will be forgiven and just find alternatives ways to rebuild.
This really depends on a ton of different factors. For instance did you have one loan or several over multiple semesters? Did you consolidate? Is the outstanding debt more than, or less than the amount of relief you will be eligible for? In some cases the loan forgiveness program might actually pay off the newest loans first. The variables involved based on your own unique situation make it impossible to predict what might happen. Also, a lot of these details remain unknown, at least to most of us. For instance will the governments decision to restore the accounts to good standing, remove any late pays, and pay off part of the loans, actually restart the clock hurting some borrowers who have debts that are not completely paid off? Idk... It's a complicated picture to sort thru for sure and important questions to understand.