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Student Loan - FICO® Scores

Student Loans

What is the effect of paying student loans while in college versus after graduation?

Once you start paying your student loan, it will be part of your credit information considered by FICO® Scores. Deferred loans do not harm FICO® Scores. The existence of the loan is a factor used to demonstrate the length of credit history and mix of credit.

Keep in mind that missing or late payments have a negative impact on FICO® Scores.

How are FICO® Scores affected by the combination of interest and principal?

Most installment loans are a combination of interest and principal. The inputs into your FICO® Scores are based on data in your credit report, which generally does not break out the interest and principal components, but instead reports the overall debt. Therefore the fact that loan payments are a combination of interest and principal does not have an impact on a score.

Does moving loans into forbearance affect FICO® Scores?

Forbearance is a period of time during repayment in which a borrower is permitted to temporarily postpone making regular monthly payments. The debt is not forgiven, but regular payments are suspended until a later time. As an example, forbearance may be granted if a borrower is experiencing temporary financial difficulty. The consumer may be making reduced payments, interest-only payments or no payments. FICO® Scores do not consider the fact that a loan is in forbearance. Therefore, the fact that a loan moved into forbearance would not impact the score. However, even when a loan is in forbearance, other information about the loan may still continue to impact the score.

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Redwood Credit Union and Fair Isaac are not credit repair organizations as defined under federal or state law, including the Credit Repair Organizations Act. Redwood Credit Union and Fair Isaac do not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating.

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