I have an 820 credit score and have been paying on student loans for about 10 years. I just make the minimum payment they ask because the history of having 10 different accounts with 100% on time payments was great for my score. I usually floated around 750-760 for year’s but when one of those accounts closed I skyrocketed to over 800. My question is if I pay off a couple of those accounts will the same trend continue? I am a home owner, 2 credit cards with 10 year history and no missed payments on anything. Want to buy a car and possibly buy a different house in next 2-4 years. Thank you
Should I pay off student debt or hold on for payment history in Credit report
byu/beefcakeriot inpersonalfinance
Posted by beefcakeriot
4 Comments
never incur more debt/interest to build credit.
Paying interest to build credit is never a good idea.
Besides, you have an 820. There is nothing left to build.
Follow this:
https://www.reddit.com/r/personalfinance/wiki/commontopics/
Reduced DTI will help you with car and house purchases.
Never pay interest to build a credit score.
You are worried about the wrong thing, as long as you keep paying your financial obligations on time don’t worry about your credit score it will be fine. It doesn’t matter if your score is 789 or 805 or 825, what you need to think about is if it makes financial sense and what could you do with the money instead of paying off your loans.
What is your loan balance and interest rate?
How much savings do you have, do you have a 6 month emergency fund?
If you have an emergency fund and the interest rates are above 7% I would totally focus on paying them off asap.
If you don’t have the emergency fund and the rates are above 7% I would split focus on building up savings and paying down the loans and once you build up the 6 months savings switch to paying off the loans.
If your student loans interest rates are lower in the 3-6% range I would continue making minimum payments and use your money to build up savings and invest in the market. The market typically returns 7-10% per year so on average you will make more in the market than pay in interest on the loans over the life of them.