Question about Credit

[d4mo]

I just paid to get my credit score last night. I'm 25 have no debt, and my score was 811. I was very impressed/happy. But I do have one question. I am going back to school this spring, and I may take out a school loan to help pay for it.

Will having the loan lowering my credit score because I now have debt and am using more of my available credit?

 

[PokerGuy]

It will likely drop your score by a few points because your debt to income ratio will change, but as long as you don't default on the student loans when they come due, your credit score will stay excellent.

 

[Tweak155]

As long as you're above 760 no one cares. I wouldn't even actively think about it.

 

[PokerGuy]

As long as you're above 760 no one cares.

That's a good point too - if you have above 740 or so, most lenders will consider you "low risk" with excellent credit and it doesn't matter what your score is beyond that.

 

[Dulanic]

Not possible at 25 to have a FICO score that high. Pretty sure you got a vantage/FAKO score instead of FICO score. Either way you shouldn't have any issues getting credit.

 

[highland145]

Not possible at 25 to have a score that high. Pretty sure you got a vantage/FAKO score instead of FICO score.

Why not? Potentially 7 years of history.

 

[heymrdj]

Not to mention he has no revolving credit history. With that your score is mainly hot air anyway. You'll take a hit no matter what the first loan you take out, then it will build back up again. Tis the way it goes.

 

[rudeguy]

Why not? Potentially 7 years of history.

he stated he has no debt

 

[highland145]

he stated he has no debt

I have no debt and 800+ fico.

 

[Dulanic]

Yeah the above reasons kind of explain it. To have a "good" length credit history he would have had to have 3-4 cards all opened when he was 18 and even then it wouldn't be good enough. I think FICO score looks for 10+ years to be considered perfect. Hell I am in my 30's and FICO still says my credit history is too short which is lowering my score. Even FICO says only 13% of the total US population has a score > 800.

It is stupid that the FAKO scores even exist... they are basically meaningless and are only there to make people "feel better" IMO since they are completely different scales.

 

[Pr0d1gy]

Not possible at 25 to have a FICO score that high.

Why not? My credit score was over 700 when I finished college because my Dad co-signed a brand new sports car for me while I was in Athens.

 

[Dulanic]

Why not? My credit score was over 700 when I finished college because my Dad co-signed a brand new sports car for me while I was in Athens.

700 isn't even close to 800 in the realm of FICO scores. By no means am I saying 700 is bad right out of school... it isn't it's actually pretty good. The only way I guess it could even be in the realm of possible was if he somehow built up credit prior to 18.... which I guess is possible as a authorized user... or at least it used to be. Dunno if that still works under 18.

 

[d4mo]

I have 2 credit cards that get paid in full every month and a college loan that was completely paid off 5 years ago.

I've also had one of the cc's for 7+ years.

 

[heymrdj]

I have 2 credit cards that get paid in full every month and a college loan that was completely paid off 5 years ago.

I've also had one of the cc's for 7+ years.

If the loan was federal it's not worth very much to you. Time of payment also matters. While your debt to income is nonexistent (good thing) your credit utilization and thus timely payment score is low. Again, get a car loan/house loan, it will plummit, then it will go back up. It's the way the game works.

 

[d4mo]

If the loan was federal it's not worth very much to you. Time of payment also matters. While your debt to income is nonexistent (good thing) your credit utilization and thus timely payment score is low. Again, get a car loan/house loan, it will plummit, then it will go back up. It's the way the game works.

If it's a federal loan I'm getting for school does that mean a it won't harm my score much(since you said it doesn't help much).

 

[heymrdj]

If it's a federal loan I'm getting for school does that mean a it won't harm my score much(since you said it doesn't help much).

Paying off loans on time helps your score, not hurt it...You seem to be lost on the fact that loans cause waves in your score. For a short period of time a loan will cause your score to lower, but paying it on time causes it to go back, and the end game is that it goes higher than it was before the loan. Credit is there to be used, if it's not being used at all then isn't your score worthless anyways? I mean if you go to get a house, and all they see is a bunch of paid off credit cards, the bank doesn't automatically think you're a good risk simply because you've done that. They want to see that you've paid large items off on time before using credit.

 

[highland145]

Yeah the above reasons kind of explain it. To have a "good" length credit history he would have had to have 3-4 cards all opened when he was 18 and even then it wouldn't be good enough. I think FICO score looks for 10+ years to be considered perfect. Hell I am in my 30's and FICO still says my credit history is too short which is lowering my score. Even FICO says only 13% of the total US population has a score > 800.

It is stupid that the FAKO scores even exist... they are basically meaningless and are only there to make people "feel better" IMO since they are completely different scales.

Ignore that, it may not apply. My equifax rep said they give reasons why your score is what it is. One of mine was excessive credit card debt.......$40 at the time.

 

[Zukatah_]

First question that comes to mind is: why do you care if your score drops by a couple of points? It's not like it's something you can mention while on a date to impress the lady...

Just take the loan as you'll need it to go to school, your credit score will go down a bit and, as you pay it off, you'll build some valuable credit history while investing in yourself while you go to school.

Just take it!

 

[HendrixFan]

Yeah the above reasons kind of explain it. To have a "good" length credit history he would have had to have 3-4 cards all opened when he was 18 and even then it wouldn't be good enough. I think FICO score looks for 10+ years to be considered perfect. Hell I am in my 30's and FICO still says my credit history is too short which is lowering my score. Even FICO says only 13% of the total US population has a score > 800.

This is true. History is the single largest factor in the scoring system, and they way they "bucket" people to derive scores makes it impossible to have an 800 at 25 years without jimmying the system. People with 800+ have a solid history going on 20 years or more.

That said, you can cheat your way into it by being an authorized user on your parent's credit card that has a long history. It will show on your report and average into your results. It is the only way to have that score, but you don't honestly get to 800 by the age of 25.