Student Loans and Credit Score - Straight from the horse's mouth

[HHM]

Thought this might be interesting for some of you. Came across a recent comment by FICO in one of its studies.

While FICO Scores include student loans in calculations that evaluate indebtedness, student loans are treated like any other installment loan. FICO scores do not employ any variables that specifically evaluate and target student loan information. It makes no difference if the student loan is backed by the government or is a private loan from a lender. Nor does it matter if a student loan is deferred. Deferred loans, if reported by lenders, can have a positive, negative, or no impact on the FICO Score, depending on what other credit information is present.

Keep in mind that when looking at the broader credit risk picture, credit card indebtedness has a much greater ability to influence FICO Scores than installment loan indebtedness. This is because credit card indebtedness has a stronger statistical correlation with borrower performance, in other words, it's [credit card performance] more predictive of credit risk.

http://www.**********.com/blog/2013/...crisis-bubble/ (scroll down to the copy of the report)

The interesting take away is that installment loans (loans with a fixed end date), in general, are not weighted very heavily in calculating the FICO score.

I am trying to track down more information on the effect of "deferred" loans, I suspect the issue there may be lack of payment history and overall indebtedness would certainly not help the credit score and might hinder the credit score.

[iswmle]

This is interesting. It was my understanding that student loans are generally viewed as a positive thing on a credit report (as long as it is current and not in default). Student loans is the only debt I have left, unfortunately (for me) it is substantial (apx56K). My main concern are how these student loans will affect my ability to find financing for a home, which I am hoping to do in the next 5 years.

[HHM]

It is not that have no positive affect, it has some positive effect if you are making regular payments and the status shows paid as agreed, it is just that the student loans are not weighted very heavily in the overall score.