Advise on Closing Oldest Credit Account (Student Loan)

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nvtech
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Advise on Closing Oldest Credit Account (Student Loan)

Postby nvtech » Fri May 31, 2013 2:03 pm

Guys,

I have over 10k debt in my student loan and after 7long years, I have now decided to pay off.
My student loan is my 1st credit and the oldest reporting credit.
What is the impact of paying off a student loan that is the oldest account in my history?
Will my credit history drop?

Is it wise to pay 80%..may be 8k, or 9k and still keep the balance.

Please advise.
Appreciate all your responses.


DoingHomework
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Postby DoingHomework » Fri May 31, 2013 2:09 pm

Just pay it off. The loan will not reduce you average age of accounts. It will look very good to have it paid off. You credit score will likely improve.

Bksuper
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Postby Bksuper » Fri May 31, 2013 2:32 pm

Installment loans show on your report for years after they've been paid off.
Sole Ownership Cards:
1st Financial Bank Platinum Student Visa, $500 CL, Open Since 3/2012
Citi Forward Student Visa, $6k CL, Open Since 10/2012
Costco TrueEarnings Amex, $6k CL, Backdates to 1/2012
SallieMae Rewards Barclay Mastercard, $2.5k CL, Open Since 4/2013
Jointly Owned Cards (co-owner with mom, not AU, used and paid only by me):
Chase Amazon Rewards Visa Signature, $2k CL, Open Since 8/2012
US Bank Cash+ Visa Signature, $13.5k CL, Open Since 10/2012
Authorized User (Parents Pay/Use)
Costco TrueEarnings Amex $29.4k CL, AU since 11/2012

MemberSince99
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Postby MemberSince99 » Fri May 31, 2013 3:23 pm

I disagree. I say leave them open. The interest rate you are paying on them is very small most likely. If that's not true, disregard.

My oldest accounts are my student loans. The amount owed is frankly minimal, I believe it's under 6k now. It would not be that hard to pay it off if I really wanted to. But honestly I don't, because the interest is low, so is the payment and debt amount, and they are my oldest accounts which would drop my AAoA and provide me with no real benefit for doing so as opposed to maintaining long standing accounts in good shape. So I choose not to pay them off early (in fact I've wished I could find a way to drag it out longer at times).

Just another view on it.

DoingHomework
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Postby DoingHomework » Fri May 31, 2013 6:34 pm

MemberSince99 wrote:...they are my oldest accounts which would drop my AAoA and provide me with no real benefit for doing so as opposed to maintaining long standing accounts in good shape.


They show up as paid accounts LONG after you pay them off. You don't "close" an installment loan account, you satisfy the debt repayment obligation. Unless you enjoy paying extra interest, you are getting no benefit from not paying off student loans (or any other installment loans). I have a loan I paid off in 1993 that still shows up as an old account. So any concern about reducing your AAoA is misinformed.

Normally paid off loans fall off after about 7 years. I have no idea why mine still reports. But if loans fall off after 7 years and stop being included in the AAoA calculation, there would be no way for anyone to have an AAoA greater than about 7 years. Think about it.

MemberSince99
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Postby MemberSince99 » Fri May 31, 2013 6:40 pm

DoingHomework wrote:They show up as paid accounts LONG after you pay them off. You don't "close" an installment loan account, you satisfy the debt repayment obligation. Unless you enjoy paying extra interest, you are getting no benefit from not paying off student loans (or any other installment loans). I have a loan I paid off in 1993 that still shows up as an old account. So any concern about reducing your AAoA is misinformed.

Normally paid off loans fall off after about 7 years. I have no idea why mine still reports. But if loans fall off after 7 years and stop being included in the AAoA calculation, there would be no way for anyone to have an AAoA greater than about 7 years. Think about it.


I did think about it, and what you're saying makes 0 logical sense to me. So there is NO way for anyone to have an AAoA greater than 7 years once those fall off, even if say they have an Amex from 1988 as their other account? Sorry, I don't buy that there is some 7 year cap on AAoA. Never heard of that one. I mean it could be some obscure thing I never heard of but that's new to me.

nvtech
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Postby nvtech » Sun Jun 02, 2013 4:52 pm

I am currently paying 3.25% interest rates and I pay close to $75 a month as payment to my student loan.

I still pay close to $40 in interest. With all your recommendations for now, I would go ahead and pay some 80% of my loan.

I still did not understand that if I payoff my student loan completely, their would be no credit record after 7 years.

MemberSince99
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Postby MemberSince99 » Sun Jun 02, 2013 6:10 pm

After a certain period of time, everything that is closed falls off your report - good or bad.



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